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Grand stakes: Australia’s future between China and India

15 September 2011   |   Lowy Institute Papers and Reports   |   By Rory Medcalf

Canberra is seeking an Indo-Pacific strategy for an era of Chinese, Indian and sustained American power. The contours of such a strategy were assessed by Rory Medcalf, in his contribution to the 2011-12 edition of the authoritative Strategic Asia series of books. His chapter provides the first parallel analysis of Australia’s relations with China and India, and proposes ways to transform Australia-India relations as well as to adjust the US alliance for the Asian century.

“How sustainable would Australia’s strategy be if China-U.S. relations, China-India relations, or both became locked in patterns of strategic competition or confrontation?”

Key Findings
Australia’s future will not be a simple choice between China and the United States – India also important to Australia’s new Indo-Pacific era
Canberra is pursuing economic and societal enmeshment with both rising powers
Australia is also hedging against Chinese power, including with a stronger US alliance and strategic partnership with India.

Full Text

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    For Australia, the rise of China and India combines vast economic gain with challenges in security and values. The Asian giants have become principal markets for Australia’s resources, major sources of human capital, and critical strategic players in the region. China brings Australia greater economic benefits than does India, but its growing military power, combined with differences over values, poses fundamental security anxieties. India, meanwhile, is seen as a potential—albeit frustrating—strategic partner. Thus, Canberra has tried to intensify diplomatic engagement and economic enmeshment with both powers, yet is also revealing a hedging strategy against Chinese power. This involves strengthening Australia’s navy, as well as enhancing the U.S. alliance and forging links with Asian partners.

    The Australia-U.S. alliance will need to adapt to an Indo-Pacific era of Chinese and Indian power. The U.S. will benefit from further coordinating its strategies toward China and India with those of Australia. Beyond candid dialogue, this could mean exploring options for basing equipment and even forces in Australia. Above all, Canberra will be sensitive to any change in Washington’s Asia strategy that leaves allies vulnerable to Chinese coercion. Yet Australia will also be wary of being drawn into unnecessary confrontation with China, as well as of seeing its interests sidestepped in a U.S.-India partnership. Either way, it will be important for the United States to engage Australian society beyond traditional policy elites when addressing the rise of China and India.