Grand Stakes
Australia's Future between China and India

EXECUTIVE SUMMARY

This chapter examines Australia’s response to the rise of China and India, including tensions among economics, security, and values, as well as implications for U.S. strategy in Asia.

MAIN ARGUMENT

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.

POLICY IMPLICATIONS

• 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 bilateral dialogue and possible trilateral talks or activities with Australia and India, this could mean placing U.S. equipment or 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 an 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 U.S. to engage Australian society beyond traditional policy elites when addressing the rise of China and India.