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As the US election enters its nerve-wracking final days, the anxiety-ridden commentary in Australia is grappling with the possible implications of the outcome. The choice of Donald Trump or Kamala Harris is already a unique choice, but the ripple effects for Australia only increase the unease as a third country comes into view: China.
There are fears that US forces in the Asia-Pacific could decline under both governments, forcing Australia to survive as best it can in a security environment dominated by the People’s Liberation Army.
However, despite its historic, long-standing alliance in the Pacific with the US, Canberra is more aligned with Beijing than Washington on international trade. While China could stoke Australia’s strategic fears, it is widely recognized that the country is still Australia’s most important economic partner.
In the US, however, there is now a bipartisan political consensus that China is an economic adversary.
The Biden administration has kept the first Trump administration’s tariffs on Chinese goods in place restrictions on capital and technology flows for good measure.
Earlier this year, Trump suggested his second administration would raise interest rates 19 percent average rate on Chinese goods 60 percent across the board.
The USA “increasingly expects its allies to toe the line” when it comes to trade policy and China. But at least on this front, several factors support the assessment that some Australian concerns may be exaggerated.
For starters, Washington’s compulsive instincts towards allies are strongest when it comes to cutting off China’s access to high technology. This means countries like Japan, South Korea, Germany and the Netherlands have and will continue to feel the heat. Australia, on the other hand, is a net importer of technology and will therefore be able to largely fly under the radar.
Still, Australia can expect US pressure in technology-related sectors, such as crucial minerals. Factoids like any F-35 fighter jet containing approximately 420 kilograms of rare earth minerals – an industry that China dominates but in which Australia has enormous potential – are routinely highlighted by the national security commentary.
But here, domestic politics are designed to ensure Australia maintains its sovereign interests.
In 2015, there was a request from the Obama administration for Australia to stop selling iron ore to China dismissed as ‘hypocritical’ by the Tony Abbott Coalition government.
A year earlier and not long before, he replaced Abbott as Prime Minister, Malcolm Turnbull jibed“I’m sure we would like to export large quantities of iron ore to the United States, but they have never shown any enthusiasm to buy it.”
A similar request from Washington today around rare earths or other crucial minerals such as lithium would likely be met with the same response and justification by Canberra. Last year, China bought $13.1 billion, or 98 percent of total Australian exports of lithium spodumene. In contrast, the United States bought only $12.1 million.
And rather than using policy tools to encourage “friend-shoring” with Australia, Washington appears more intent on bringing supply chains onshore. Instead of relying on the Australian offer, the Biden administration has done just that busy subsidizing the development of lithium mines in Nevada. It shows off proudly that “the US is expected to supply more than a fifth of global demand [for lithium] outside China by 2030.”
So is much of Australia’s production of critical minerals not eligible to take advantage of US subsidies in initiatives like the Inflation Reduction Act.
Other US initiatives to generate local enthusiasm include changes to the US Defense Production Act, which lists Australia as a ‘domestic source’. But the fine print thwarts this hope: Australia will only be considered a “domestic source” if the US requests it.cannot be fully addressed” by companies in North America.
The growing similarity between China and Australia goes beyond transactional partnerships.
In three recent cases, both Australia And China agreed to settle their disputes at the World Trade Organization (WTO) and abide by the independent jury’s ruling. On the other hand, if the US loses a WTO case, that will be the case declares no intention to fulfil.
In July, Australia led the guiding new WTO rules around e-commerce. China signed on, but the US refused to commit.
The Australian government stated this year that it will not follow Washington in banning Chinese software applications such as TikTok, nor in applying unaffordable tariffs on manufactured goods such as electric vehicles.
All these differences between Canberra and Washington would be appreciated in Beijing.
In recognition of the fact that China wants what Australia excels at, and vice versa, Commerce Secretary Don Farrell said said in March he would like to see bilateral trade grow from $300 billion to $400 billion.
Not to be outdone, in June, Opposition Leader Peter Dutton noted he “would like to see the trade relationship [with China] double.”
What this all points to is that, regardless of the outcome of the US election, stabilization in Australia’s relations with China need not simply be thrown off course.
Originally published under Creative Commons Through 360info™.