Beijing\u2019s failed efforts to bully Australia have highlighted the limits of its power.<\/b>
\n\u201cChewing gum stuck on the sole of China\u2019s shoes.\u201d That\u2019s how Hu Xijin, the editor of the Chinese Communist Party\u2013run Global Times, described Australia last year. The disparaging description is typical of the disdain that China\u2019s diplomats and propagandists have often shown toward governments that challenge Beijing\u2014like Australia\u2019s. China is now the great power of Asia\u2014or so Beijing believes\u2014but those pesky Australians, mouthing off about human rights and coronavirus investigations, refuse to bend the knee. Beijing has turned to economic pressure to compel Australia to fall in line. \u201cSometimes you have to find a stone to rub it off,\u201d Hu wrote, of the gum and of Australia. But the Australians have proved impossible to shake, and have instead caused some embarrassment for their image-obsessed tormentor. The ongoing dispute between Australia and China may seem merely a bilateral affair, fought out in a remote corner of the planet. But it matters around the world. Australia is a crucial American ally in Asia, so China\u2019s actions toward the country inevitably affect both Washington\u2019s policy and its standing in the region. Australia is representative of many countries: a midsize nation whose economic relationship with Beijing is vital for growth and jobs but, simultaneously, whose politicians and citizens are becoming more concerned about China\u2019s repressive tactics at home and aggression abroad. The deteriorating relationship between the two countries thus reveals a lot about how China\u2019s leaders can and can\u2019t employ their growing diplomatic and economic power, as well as the options, consequences, and costs for countries, such as Australia, that seek to stand up to Beijing. Australia \u201creally is a bit of a canary in the coal mine,\u201d Jeffrey Wilson, the research director at the Perth USAsia Centre, a foreign-policy think tank, told me. \u201cYou should care about what is happening here, because it\u2019s got lessons for everyone.\u201d The most important lesson is also the most unexpected. On paper, the outcome of a China-Australia showdown looks like a foregone conclusion. China, a rising power with 1.4 billion people and a $14.7 trillion economy, should trample a country of 26 million with an economy less than one-tenth the size. But in a world wrapped in interdependent supply chains and complex political connections, smaller countries can wield a surprising armory of weapons. The U.S.-led global order, still held together by common interests, long-standing relationships, cold strategic calculation, and deeply felt ideals, isn\u2019t ready to crumble before the march of Chinese authoritarianism either. The story instead offers a more intriguing twist: a China that badly wants to change the world but can\u2019t even change an uppity neighbor. Chinese leaders \u201care trying to make an example of us,\u201d Malcolm Turnbull, the former Australian prime minister, told me. \u201cIt is completely counterproductive\u2026 It is not creating greater compliance or affection.\u201d Quite the opposite, he said: \u201cIt is confirming all the criticisms that people make about China.\u201d That should lift spirits in Washington. Australia is a key pillar of the network of alliances that upholds American dominance in Asia and the Pacific. If anything, Washington\u2019s ties to Canberra are becoming even more important. Australia and the U.S. are members of the \u201cQuad,\u201d a loose grouping with Japan and India that largely seeks to contain China. What happens to Australia, therefore, has tremendous consequences for U.S. power in the Pacific. \u201cChina can\u2019t bash up on the U.S., but it can bash up on its allies,\u201d Richard McGregor, a former Beijing bureau chief at the Financial Times who\u2019s now a senior fellow at the Sydney-based Lowy Institute, told me. \u201cIf China can break Australia, then that\u2019s a step to breaking U.S. power in Asia, and U.S. credibility globally.\u201d Australia\u2019s importance hasn\u2019t gone unnoticed in the White House. President Joe Biden\u2019s top diplomats have been loud and clear in their support for Australia. His Asia-policy czar, Kurt Campbell, said in March that the administration told Chinese authorities, \u201cThe U.S. is not prepared to improve relations in a bilateral and separate context at the same time that a close and dear ally is being subjected to a form of economic coercion.\u201d The U.S., he added, is \u201cnot going to leave Australia alone on the field.\u201d The dispute between Australia and China has been brewing for years. Like the U.S. and other democracies, Australia embraced engagement with China, and the two economies became entwined in a highly profitable symbiotic relationship: Australia\u2019s treasure trove of natural wealth became indispensable to China\u2019s rapidly expanding industrial machine. The countries even entered into a free-trade agreement in 2015. The ink had barely dried, however, when Canberra began to grow nervous about Chinese President Xi Jinping\u2019s bellicose foreign policy. Turnbull, who as prime minister from 2015 to 2018 was instrumental in forging Australia\u2019s response, wrote in his book A Bigger Picture that China \u201cbecame more assertive, more confident and more prepared to not just reach out to the world\u2026 or to command respect as a responsible international actor \u2026 but to demand compliance.\u201d Australia more openly criticized China\u2019s encroachments on the South China Sea\u2014vital for Australian shipping\u2014where Beijing built military installations on man-made islands to solidify its contested claim to nearly the entire waterway. Turnbull also grew alarmed by the sums of Chinese money sloshing around Australian politics, spent to sway government policy in China\u2019s favor. That led to new legislation designed to curtail foreign influence. Then in 2018, Turnbull\u2019s government banned Chinese telecom giant Huawei from supplying equipment for Australia\u2019s 5G networks, considering it too much of a security risk to essential infrastructure. Relations really fell off a cliff in April 2020, when current Prime Minister Scott Morrison\u2019s government called for an independent investigation into the origins of the coronavirus outbreak\u2014a prickly issue in Beijing, where such demands are perceived as politically motivated efforts to tarnish China. Beijing duly went ballistic. (Hu\u2019s chewing-gum comment was part of the angry response.) To force Canberra to back down, the Chinese government unsheathed what has become its weapon of choice against recalcitrant nations: economic coercion. Among other measures, Chinese authorities suspended the export licenses of major Australian beef producers; imposed punitive tariffs on barley and wine; and instructed some power plants and steel mills to stop buying Australian coal. In all, Wilson, of the Perth USAsia Centre, figures that Australia lost $7.3 billion in exports over a 12-month period. Some industries have been hit especially hard: The rock-lobster industry, almost totally dependent on Chinese diners, was decimated after Beijing effectively banned the delicacy. Canberra wouldn\u2019t budge, though. \u201cWe have to simply stand our ground. If you give into bullies, you\u2019ll only be invited to give in more,\u201d Turnbull told me. \u201cThere is a lot to be said for nuance and artful diplomacy, but you can\u2019t compromise on your core values and your core interests.\u201d So far at least, the Australians haven\u2019t had to. Beijing hasn\u2019t been able to inflict sufficient pain to compel Canberra to concede. Wilson notes that the sacrificed exports amount to a mere 0.5 percent of Australia\u2019s national output\u2014not pocket change, but hardly a crisis, either. A few industries have adapted by diversifying their customer bases. Some coal blocked by China was redirected to buyers in India. And there was a limit to how hard Beijing could squeeze: Australian iron ore is the lifeblood of China\u2019s construction industry, and Australian lithium underpins the Chinese electric-vehicle industry. Beijing\u2019s pressure campaign has succeeded in one important respect, though: souring Australians on China. In a recent Lowy Institute survey,63 percent of respondents said that they see China more as a security threat than an economic partner to Australia\u2014a 22-percentage-point surge in a year\u2014while a mere 4 percent find their own government more to blame than Beijing for the breakdown in relations. Girded by such public support, Australia\u2019s usually contentious politicians have forged common cause regarding China, unity perhaps even strengthened by Beijing\u2019s coercive tactics, though critics do take issue with some specifics. \u201cThere was probably relative bipartisan unity before, about building up the relationship with China,\u201d McGregor said. Now that the tables have turned, he continued, \u201cit\u2019s sort of a bipartisan view in the other direction.\u201d None of this has persuaded Beijing to rethink its strategy. From the perspective of China\u2019s leaders, the Australians have trod on too many sensitive toes. In the same way the Australians see changes in Chinese policy behind the collapse in relations, Beijing blames Canberra. Zhao Lijian, a spokesperson for China\u2019s Foreign Ministry, said late last year that the \u201croot cause\u201d of the dispute is \u201ca series of wrong moves\u201d by Australian authorities. Shortly after, the Chinese embassy in Canberra handed out a list of 14 grievances to the local press, which included such actions as unfairly blocking Chinese investments and spearheading a \u201ccrusade\u201d against Beijing\u2019s crackdowns in Hong Kong and the far-west province of Xinjiang. (Similarly, but more formally, a top Chinese diplomat gave U.S. Deputy Secretary of State Wendy Sherman two lists of complaints Washington had to fix to improve ties during talks in the port city of Tianjin earlier this week.) How the impasse resolves itself is not at all clear, as both sides continue to slug each other. In April, Australia\u2019s foreign minister canceled two agreements signed by the state government of Victoria as part of Xi\u2019s pet infrastructure-building project, the Belt and Road Initiative, claiming the deals were \u201cadverse to our foreign relations.\u201d Then in May, Chinese officials suspended a bilateral economic dialogue. Much clearer, however, is what the stalemate tells us about China\u2019s position in the world. Ultimately, Beijing\u2019s attempt to use Australia to warn other countries of the costs of taking on Chinese power has ended up instead highlighting Chinese weakness. China remains too reliant on the outside world to fully exploit its market leverage, and it still lacks the tools to project its power beyond its own borders in the way that the U.S., for instance, capitalizes on the primacy of the dollar to extend its reach. Rather than scaring other governments into sullen silence, the unsuccessful campaign against Australia could embolden them to stand up to China on issues they consider of core importance. Australia, however, was able to confront Beijing because of its political unity. That\u2019s a key takeaway from the Australia story. Policy experts spill a lot of ink about the crucial role alliances between countries will play in the coming contest with China. But those international bonds cannot hold firm without corresponding alliances between national political parties and interests within the allied democracies. We can see such a consensus forming in the U.S., another country where a strong position on China is backed by widespread political support. At the same time, China\u2019s tussle with Australia could have long-term consequences for its economic ties to other countries. Many policy makers are already concerned that economic dependence on China could compromise their national security. The case of Australia could heighten those fears and, as Wilson speculates, lead to \u201crepricing political risk in terms of economic relationships with China.\u201d The Australia situation \u201cwill be a story of how governments and businesses around the world have had to reappraise what having an economic relationship with China is like.\u201d Yet an even darker message emerges from Australia\u2019s example: China may have failed to change Australia, but Australia hasn\u2019t changed China, either. This holds out the terrifying prospect of a new world order marked by almost constant conflict\u2014if not military, then at least economic, diplomatic, and ideological. That is, unless both sides can find another way. \u201cChina has and will continue to behave badly,\u201d Geoff Raby, Australia\u2019s ambassador to Beijing from 2007 to 2011, told me. \u201cChina won\u2019t be changing, and we have to find a way of living with a China that is not like us but is big, powerful, and ugly.\u201d<\/p>\n