CANBERRA, Australia — For more than two decades, Australia has danced a delicate two-step with the United States and its longtime Pacific allies on one hand and a not-so-friendly but big-spending China on the other.
It was a split-the-difference approach that raised eyebrows — and blood pressures — from Washington to Tokyo and Seoul to Manila, where the view of Beijing’s designs on the region is colored far more in terms of potential threats than trade-related partnerships.
German Chancellor Angela Merkel, at a Group of 20 summit in late 2014, asked Australian Prime Minister Tony Abbott the motives driving Canberra’s relationship with Beijing. His response: “Fear and greed.”
Chinese demand for iron ore, natural gas and other raw materials poured billions of dollars a year into Australian government coffers, even as Beijing relentlessly spread its trade and military wings across the region, challenging the balance of power in the South China Sea. A tougher line on China on security threatened to derail the economic gravy train.
“It is difficult to see how Chinese hegemonic pressure can be restrained,” said Keith Loveard, a regional conflict analyst with Jakarta-based Concord Consulting. “The most important question is: What should the rest of the world do when China establishes de facto control of the region? There are very few answers to this.”
But a big change is in the air Down Under. A 10-year defense blueprint unveiled this year reveals an Australia that has grown deeply skeptical of China’s long-term ambitions for the region.
Under the plan, Australia will sharply increase defense spending and harden its stance against Beijing’s aggressive push and construction of man-made islands in the hotly disputed South China Sea, offering support to the U.S. Navy’s “freedom of navigation” missions directly challenging China’s territorial claims.
Under the Defense White Paper, Australian defense spending will nearly double from $23 billion in fiscal year 2016-2017 to $41.1 billion annually by fiscal 2025-2026. The most ambitious increase of its kind in the nation’s history will include money for a dozen new submarines and investment in high-tech defense R&D.
“We are a maritime power,” Australian Prime Minister Malcolm Turnbull said in Canberra when the defense road map was released. “An island nation needs a strong navy. It particularly needs a strong navy in this environment.”
When a U.S. guided-missile destroyer recently passed within 12 nautical miles of the Chinese-occupied Fiery-Cross Reef, China denounced the passage as an illegal threat to peace. Australia backed the U.S., and Mr. Turnbull called President Obama to voice Canberra’s “strong commitment to freedom of navigation.”
Forced to pick sides, Australia is throwing in with the U.S. and its allies in the struggle to shape the evolving balance of power in the region, said Ray Leos, a regional academic with Pannasastra University in Phnom Penh.
“The linchpin of Australia’s strategic policy, which has pretty much been the consensus view shared by its major political parties over the years, is that the U.S. is Australia’s most important strategic ally, and it also plays a crucial role in providing stability in the Asia Pacific,” Mr. Leos said.
Analysts said Australian politicians were finding speaking out on China has become a little easier amid weak commodity prices and growing anti-Beijing sentiment. Beijing’s case has not been helped by an influx of Chinese money buying up Australian real estate, from cattle stations to suburban homes, which has been blamed for pricing locals out of their own markets.
With a national election looming July 2, Mr. Turnbull’s right-wing government blocked the sale of Australia’s biggest single land holding — the Kidman cattle empire encompassing 1 percent of the vast, continent-sized country, or 39,000 square miles — to a Chinese-led consortium.
The sale, for $288 million, was deemed as “may be contrary to the national interest” — an awkward political step for the conservatives whose strong pro-market mentality has dominated their three years in power and is wearing thin on voters.
Anti-China sentiment has also been stoked by a backlash against pro-Beijing activism by ethnic Chinese living in Australia and even complaints by the queen of England. Britain’s Queen Elizabeth II, Australia’s formal head of state, said Chinese security staff were rude during a visit to London by President Xi Jinping.
There is also residual resentment over the leasing of the port of Darwin to a Chinese company. Complaints that the public was not consulted widely enough and fears the deal could compromise security surrounding a potential rotating force of 2,500 U.S. Marines garrisoned nearby have been made loud and clear.
Politics and French submarines
It was against that backdrop that Mr. Turnbull announced that French ship builder DCNS had fended off competing bids from Germany and Japan, winning a $40 billion contract to build the Australian navy a new class of submarine, which will be armed with American-made combat systems.
Analysts say the tight security relationship between Canberra and Washington has meant senior U.S. officers were involved with the bidding process and initially favored the Japanese bid because of pressing security issues in the South China Sea.
Japan, facing escalating tensions with China over the Senkaku Islands, hoped to use the project to kick-start an arms exports business of its own, but there was speculation that a successful Japanese bid would have angered China.
Hugh White, a defense scholar with Australian National University, argued that a submarine deal with Japan would ultimately push Australia closer to a conflict with China.
Concord Consulting’s Mr. Loveard added that China was not making many friends in the region with its insistence that the large swaths of the South China Sea — known as the East Sea in Hanoi and the West Philippine Sea in Manila — is its inalienable territory.
“But, given that it is not a front-line state in this argument, it is hard to see why Australia feels the need to adopt a tough stance against China, which after all is a major trading partner,” he said. “The traditional alliance with the U.S. should not be seen as the only game in town and Australia might be far better positioned to adopt a more neutral tone towards China.”
The pushback against Beijing’s claims can also be seen in President Obama’s message-sending trip to Vietnam last week, a highlight of which was the announcement that Washington was lifting the ban on military sales to Hanoi that dated back to the Vietnam War. Australia and Vietnam agreed last year to hold their first joint naval exercises, and Australia has offered to help train the Vietnamese military.
But revising Australia’s traditional balancing act between a once-dominant U.S. and a steadily rising China comes with risks, Mr. Leos said.
“The most obvious challenge for Australia is how to walk that fine diplomatic line of not only maintaining a close security relationship with the Americans, but also maintaining a strong trade relationship with China,” he said.
“This may be particularly challenging for the Turnbull government since U.S. defense officials have expressed concern over the Chinese military buildup in the South China Sea and the need to maintain a credible deterrence to China’s militarization.”