The challenges faced by Australia in managing our relationship with the Peoples’ Republic of China (PRC) revolve around two key features, 1) how China will assert itself militarily as it attempts to return to its rightful place in the world with its rise as a economic and military superpower and, 2) the reaction to this by the United States of America (US). Australia if it wishes to prosper from the rise China well into the Asia-Pacific century needs to build a multi-facet working relationship with both the United States and China through both bi-lateral and multi-lateral forums. Australia like the United States has sort to engage with China through the field of economics and it is hoped through this that China can ‘help construct a harmonious global order by both contributing to and abiding by the rules of that order’. If Australia is capable of wedging itself between a rock (The United States of America) and a hard place (The Peoples’ Republic of China) then we have the potential to harness the benefits flowing from the strategic competition between the world’s two largest economic and military powers so Australia can help shape a stable and prosperous Asia-Pacific century.

The Australian Defence White Paper 2009 indentifies several areas in which Australia should be developing its defence and strategic capabilities working towards the year 2030. The Defence White Paper indentifies the major potential areas for conflict in the Asia-Pacific as stemming from two main areas, the collapse of the North Korea regime and from what it calls ‘the strategic implications of the rise of China’, including the PRC’s military modernisation which it claims is ‘beyond the scope of what would be required for a conflict over Taiwan’ . Australian Strategic Security not only occurs through having the ability in conjunction with the United States to repel any armed attack on the Australian homeland but also its shaping of a harmonious regional environment in which Australian trade with Asia can take place. The naming of China as the greatest potential in the 2009 Defence White Paper according to Sainsbury, ‘was one of the issues that contributed to the detriment of relations between Australia and China’ during the Rudd era.

The strategic competition the world is now witnessing between a rising China, and a stagnant United States has the potential to provide Australia with much needed foreign income, but there still are many challenges facing Australia in managing our relationship with China. The United States has since the 1970s had a two prong approach when it comes to dealing with the PRC. The first aspect originating from the State Department has been one of engaging China through trade and economics. The other sometime contradictory policy which originated from the Pentagon and has been one as hedging. Both of those policy approaches to dealing with China’s rise have potential pitfalls for Australia as it attempts to secure its place in the Asia-Pacific Century.

According to Hugh White for the last forty years Australia’s prosperity has been underwritten by China and Japan’s acceptance of the military superiority of the United States in the Asia Pacific region. Zhang has described Australia’s greatest foreign policy challenge as to ‘balance its security alliance with the USA and its growing relationship with China.’ With China’s rise as an economic and military power and the prediction that it will be the largest economy by 2030 has seen the PRC start to assert its military power in the South China Sea. Understanding the PRC’s assertion of its military power in the Asia-Pacific region is the one of the most important challenges for Australian foreign policy and balancing this with its strategic relationship with the United States will be difficult task for any Australian leader.

Australia’s future responses to the PRC’s assertion of power in the Asia-Pacific Region will be dictated by the response of the United States and whether it chooses to engage or to hedge the PRC on the various issues that may arise. White’s argues that the United States has three choices when it comes to responding to China’s rise ‘withdrawing from Asia, sharing power or competing with China’ all of which have ramifications for Australia’s future direction. Before the events of the 11th of September 2001 the United States and the PRC had fallen out over several issues, ‘Taiwan, the American bombing of China’s embassy in Belgrade and a fatal mid-air collision between an American EP3 spy plane and a Chinee fighter’. Any repeat of such a falling out may in the future trigger the PRC to use its new military capabilities against Taiwan or even the United States.

Australia has followed the lead of the US and has adopted a policy of engagement when it comes to trade policy with the PRC. Australia’s trade dependence on the PRC has grown over the last few years to such an extent that the PRC is now Australia’s most important trading partner, thus exposing the main contradiction in Australia’s current foreign policy. To pay for its upgrade in military capacity in accordance with the Defence White Paper 2009 through the purchase of modern weapons technology and platforms from the United States, Australia is dependant on the revenue raised from its natural resources exports to the PRC. This contradiction for Australia of having its largest economic partner as the strategic rival of it military ally is a challenge especially as the PRC seeks to increasingly impose its intentions upon the region.

The greatest source of tension between the PRC and the United States is centred upon the US supplying arms to the dissident Chinese province of Taiwan. To the Chinese Communist Party (CCP) the Taiwan issue is of such national significance that it is perceived that if Taiwan was successful in achieving full independence from China that it would mean an end to the rule of the CCP and anarchy for the rest of China. With the survival of the Communist regime at stake there can be no doubt as to whether the PRC will go to war with the United States over Taiwan. If there was to be a conflict involving China and the United States, Australia would have to stop its policy of hedging and choose to side with either our main military ally or largest economic partner. Both the US and the PRC don’t have much experience in dealing co-operatively with equals and must come to realise that both one will ever dominate over the other and so therefore a negotiated settlement over the Taiwan issue is the only possible solution.

The PRC is also very sensitive to criticism revolving around human rights issues due to the explosion of internal conflict in Tiananmen Square in 1989 where the government came into conflict with certain sections of the community as well as fighting breaking out between various factions within the government. David Shambaugh exposes the leadership contradictions plaguing the PRC when he states,
Since the 1990s, there has been an evident, if subterranean, three-way struggle being played out among the army, party, and government- with the army seeking greater autonomy from the party, the party attempting to strengthen its control of the army, and the government trying to increase its own jurisdictional oversight of the armed forces.

If the political system run by the CCP does fall apart and erupt into civil warfare the dangers faced by Australia will be just as dire as if the PRC and the US were to go to war. This would have a disastrous effect not only Australia’s economy but also on the Asia-Pacific region.

Australia’s trade relationship with the PRC is so important to us that when the world went into recession with the Global Financial Crises in 2008 Australia remained in positive growth due to natural resource exports to the PRC’s. Australia’s dependency on exporting raw materials China accounts for $46,448 million, which accounts for just over 23% of all Australian export income. Australia’s dependency on the PRC for foreign income economically is similar to our dependency on the ANZUS Alliance with the United States for maintaining our strategic security.

From a Chinese perspective the greatest issue in managing its relationship with Australia is the repeated criticism of the CCP’s approach to human rights. Australia has a long history of criticising the CCP’s human rights records ever since Gough Whitlam visited Beijing in 1972 and became the first Western leader to recognise the CCP as China’s legitimate government. Australia faces great challenges to managing its relationship with China when it comes to openly criticising the PRC’s human rights record as Kevin Rudd found out during his 2008 visit.

Rudd after he was elected as Prime Minister of Australia in 2007 made his first international visit to the PRC in 2008 thus signalling the importance he placed on the Australia-China relationship. Many commentators especially those from the conservative side of politics perceived this as the start of Australia’s turning away from the United States and towards aligning itself with the PRC , especially considering Rudd’s recent coming out as a Christian Socialist in the Monthly. In his visit to China Rudd deliberately sought to issue a challenge to the CCP’s with his speech at Beijing University. Rudd described these criticisms as expressing a form of true friendship known in Chinese as ‘Zhengyou’ where issues are openly discussed.

In this most famous of his many speeches on China, Rudd criticised openly discussed several of the main contradictions plaguing the CCP to Beida’s students and staff. Rudd became the first world leader to openly criticise the CCP and its approach to human rights on mainland China. Rudd also quoted from dissident scholar Lu Xun who designed Beida’s crest but he also compared the CCP to the Emperor during the Hundred Days Reform Movement and associated the official party policy of building a harmonious society to Kang Yeuwei’s calls for political reform in the early nineteenth century, all in Mandarin. The response by the government officials in the US and Australia was one of stunned silence, with The Age reporting that Rudd was rebuked by China, and the masses of all three countries congratulating Rudd for his groundbreaking and courageous speech.

Through his speech at Beida, Rudd broke new ground for a foreign leader in openly criticising the PRC’s human rights policy in China, to the Chinese masses and in the Chinese language. With his speech Rudd upset the delicate balance not only of the Australia-Chinese relationship but also the US-Chinese and Australia-US relations as well. As a result the United States instigated a campaign of destabilisation against Rudd which contributed to his removal and replacement by Julia Gillard as prime minister. With the removal of Rudd as Prime Minister future Australian leaders will need to be careful to consult the United States before conducting ‘Zhengyou’ in bilateral dialog with China. Through his criticisms Rudd created fear in both the CCP and US political establishments, which has made him now one the most sort after foreign ministers in the world when it comes to making speeches and public commentary.

So therefore in conclusion the major challenge facing Canberra in managing its relationship with China is how to position Australia between a rock and a hard place, the United States and China, whilst still maintaining Australia’s prosperity and ability to shape a stable and prosperous Asia-Pacific region. The difficulties in doing lye in balancing the economic opportunities than can be found in trading with the PRC against the strategic protection offered by the United States. If the Peoples’ Republic of China and United States were to come into conflict over issues like Taiwanese independence Australia would be force to make a difficult choice. Australia has faced difficulties in dealing with ever since Gough Whitlam became the first western leader to recognise the PRC as the legitimate government of China.

Kevin Rudd faced issues not only when the Defence White Paper 2009 labelled the PRC as Australia’s greatest potential threat but also in his first official overseas visit as Prime Minister, when he criticised the CCP in China in a style like no other world leader has ever done. The problems caused by Rudd’s speech at Beijing University created issues for both the governments of both the PRC and the United States which ultimately contributed to his removal from power. Rudd recent rehabilitation as Australian Foreign Minister looks set to cause a challenge to Gillard in her leadership on Australian foreign policy which just might be Gillard’s biggest challenge when it comes to dealing with Australia-China relations. As the Chinese might say about Gillard, not afraid of the God, not afraid of the Devil, but afraid of a Former Prime Minister speaking in the Chinese language.