September 28, 2023

When should and shouldn’t we compete with China?

This week Foreign Minister Penny Wong warned the UN General Assembly of increasing tensions in the Indo-Pacific. At the same time, Minister for International Development Pat Conroy has been vocal in declaring that Australia’s aid program is “not transactional” in a hint of competitive differentiation.

But what exactly is the future relationship between Australia’s geostrategic circumstances and our development program?

Interestingly (and as many have observed), the newly released International Development Policy is silent on China. Perhaps this silence answers the question by implying that geopolitics is not the big concern. But perhaps it just adds tension to competing demands.

Either way, regional pressures continue and the question is yet to be tackled head-on by leaders.

So this week, we’re diving in to a more basic question that may be coming down the line for policymakers and decision makers: when should and shouldn’t we compete with China? Here’s what three experts say.

Justin Bassi
Executive Director, Australian Strategic Policy Institute

Competition with China is the defining strategic challenge of our era. It is constant and, therefore, Australia must choose to participate fully and consistently, just as Beijing will relentlessly pursue its strategic goals even in areas of potential cooperation such as trade, climate or regional crisis response.

Engagement with China is never just about the bilateral relationship or the economy. It should always be viewed as competing for the shape of the evolving international system—of which fundamental principles such as rules-based trade and human rights are central features. Even as relations ‘stabilise’ and opportunities for cooperation are identified, sunlight should continue to be poured on intimidatory behaviour.

Similarly, Australia should avoid reinforcing Beijing’s false narrative that this is all about great power competition and US containment of China.

The Australian Government deserves much credit for improved China relations. However, the principle upon which its China policy rests - that of “cooperate where we can and disagree where we must” - is going to be tested and risks buckling because figuring out which issues belong in which basket is actually at the heart of the competition. Beijing will aim to erode our resilience so that very few issues ever fit in the category of “must” disagree while bloating the areas on which we “can” cooperate, even when there are security risks or human rights abuses.

Resilience means learning to live with tension and acting consistently on issues of principle and national interest as Beijing senses Western desire for re-engagement and uses it as an opportunity to test the limits of our resolve.

Justin is a seasoned expert in foreign policy, international relations, and national security strategy, and these days heads up the Australian Strategic Policy Institute (ASPI). He has held senior roles in Intelligence across the APS and served as Chief of Staff to the then-Foreign Minister Marise Payne, and National Security Adviser to then Attorney-General, George Brandis. Justin was also the National Security Adviser to then-Prime Minister Malcolm Turnbull, responsible for all areas of security legislation. The Lab appreciates his knack for getting to the core of an issue and bringing clear-cut analysis to complex problems.

Hayley Channer
Director for Economic Security, United States Studies Centre

Recognising Australia’s size and scale limitations in comparison with China, we should focus on competing with China for infrastructure and investment in the Pacific and not attempt to compete across the whole Indo-Pacific.

September 2023 marked 10 years of China’s Belt and Road Initiative (BRI). China has spent one trillion dollars on infrastructure investments globally. There’s no way Australia, even in partnership with the US, Japan and others, can compete with China dollar-for-dollar or in speed. However, in the South Pacific, it’s strongly within Australia’s interests to do what it can to compete with China’s offering.

Although Pacific Island countries desperately need investment of all kinds to build their economies and increase living standards, the way China is delivering aid is undermining stability through increasing indebtedness and fuelling poor governance. Take Solomon Islands as a case in point. As part of China’s BRI, it recently gifted seven sporting facilities to Solomon Islands, in preparation for the 2023 Pacific Games. While China has committed to maintain these facilities for the next two years, the cost of upkeep beyond that for a country with a population of around 700,000 will be a burden.

These projects and others like it across the Pacific serve as vanity projects for elites and undermine broader development efforts. While Australia can’t prevent these projects from proceeding, it can invest in education and training, capacity building and anti-corruption efforts to target the root cause. At the same time, there’s more Australia can do to demonstrate it belongs to the ‘Pacific family’ including increasing the number of permanent residency visas for Pacific Island nationals and providing healthcare.

Hayley is a leading expert on China’s Belt and Road Initiative, infrastructure and investment in the Indo-Pacific, and multilateral economic frameworks. She has a broad interdisciplinary background, with experience as an Australian Government official, Ministerial adviser, think tank analyst and across the public and private sector. At the Lab, we’re in awe of her intellect and love her commitment to engaging with hard-hitting questions.

Heather Murphy
Senior Analyst, Development Intelligence Lab

Officially, “compete” is not one of the verbs in the China mantra, recited each night by policymakers as they kneel next to their beds, make the sign of the Quad, and whisper: our Penny, who art in Cabinet, let us cooperate where we can, disagree where we must, and always – always – engage in the national interest.

Nor does it feature in Australia’s new development policy, yet the imperative to out-bid, out-play, and out-build the PRC has clearly shaped many government investment decisions – both ODA and non-ODA – over the last decade. In the most challenging strategic circumstances in generations, geostrategic whack-a-mole has been the name of the game.

The problem with whack-a-mole is that sooner or later everything starts to look like a mallet - especially development assistance. But before they reach for the ODA budget, there are two questions I’d suggest policymakers ask themselves when confronted with a new critter to clobber.

One: what are we competing for? Are we really in a contest here to see who can contribute more effectively to a development outcome in the region? Or are we actually jostling for goodwill, access or elite favour?

Two: are we competing with the right thing? If it’s development impact we’re chasing, go for ODA. That’s what it’s there for. But if it’s a more strategic result we’re after – I’m unconvinced that development assistance is the tool for the job. It’s scarce, administered through systems that are geared towards development outcomes, and comes with public expectations for how and why it’s spent.

Rather than bending our existing tools to meet our immediate needs, let’s invest in new ones – different sources of non-ODA funding, new partnerships and policy levers. This would better equip us to play the two-track game that our strategic circumstances, and national interests, demand: to make the tactical plays that address immediate risks, while keeping our gaze fixed on the long-term goal of development impact.

Heather is the Lab's Senior Analyst and foreign policy expert with a background in international development, aid and the Pacific. She has over a decade of hands-on experience in the field of international relations, as a diplomat and development practitioner. In a previous life, she was a Senior Analyst at the Office of National Intelligence. The team at the Lab love her keen analytical instincts, breadth of experience, creative policy ideas and ‘just do it’ kind of attitude.

Read more