How the Chinese Dictator Bites His Teeth on Australian Bitcoin: Wall Street Positions Itself

Almost all eyes are currently on the Russian offensive war in Ukraine. The invasion of Russia overshadows many other conflicts. But in terms of security policy, the Indo-Pacific has been increasingly at the center of the major powers and superpowers for years. Because some of the sea routes in the region are considered the most important trade routes in the world. Whoever controls them also has some control over the global economy – and thus a powerful lever of power.

China and the US are therefore fighting bitterly for dominance in the Indo-Pacific. There are mutual threats and occasionally the warships of both sides come dangerously close.

But escalation is not just in the air in the conflict over the island republic of Taiwan, it could get worse: A few years ago, China started targeting Australia – with espionage, with military threats and with an economic war.

However, Chinese President Xi Jinping is struggling in the conflict with Australia. At first glance, China appears to be economically and militarily superior, but is that enough? In particular, a Chinese weakness could prove fatal to Xi in the conflict.

Close partners become rivals

In the struggle for supremacy in the Indo-Pacific, Australia is a thorn in the side of the Chinese leadership. It is true that of the 25 million Australians, more than a million have Chinese roots, so you could assume that the peoples are close by.

But: Australia is not only democratic and therefore an enemy of the system, but is also one of the closest allies of the US in the region, alongside Japan and South Korea. In addition, Australia is a wealthy and emerging power that will gain geostrategic influence in the future.

That is why China tried to control Australia early on – by first expanding economic relations with the country. As late as 2014, Xi Jinping spoke in the Australian parliament, where he was seen as a beacon of hope.

But this hope was bitterly disappointed.

China is still Australia’s largest trading partner, but relations between the two countries have deteriorated noticeably since 2017. The main reason for this: China simply went too far in influencing Australia.

China’s long arm

The crisis period began with a spy drama. In the middle was the Chinese billionaire Huang Xiangmo and Australian MP Sam Dastyari. Dastyari was considered a young star in the Labor Party at the time, and Xiangmo is a well-connected businessman in the Chinese leadership.

Dastyari had not only accepted donations from his Chinese benefactor, but also warned him against surveillance by Australian intelligence. A scandal that hit Australia in the middle of the 2017 election campaign.

And it shouldn’t have been the last scandal. Chinese businessmen tried again and again to buy influence with money. Former Labor leader Bill Shorten also accepted the equivalent of $41,000 from a Chinese billionaire for a joint lunch. Nerves in Australia were tense – and then Prime Minister Malcolm Turnbull even switched to Chinese during a campaign speech and called on the Australian people to “stand up” against undue foreign interference.

Observers see all this as evidence that China’s attempt to exert influence follows a clear strategy from Beijing: billionaire Huang Xiangmo had good relations with the so-called united front. This branch of the Communist Party’s mission is to strengthen the party’s influence among non-Communists at home and abroad. In other words, Xi has revived the united front to buy power abroad – including in Europe. In the past, he described it as the party’s “magic weapon”.

Influence from Beijing: Australia responds

Australia suddenly finds itself in a situation where by far its most important trading partner does not accept the country’s political sovereignty. In addition, there is Chinese industrial espionage and hacking; Chinese companies are buying up more and more land Down Under.

But then came the turning point. After the 2017 election campaign, Australia started to fight back.

The country excluded Chinese company Huawei from the 5G expansion and publicly called on Beijing to respect human rights in Hong Kong and in dealings with the Uighurs in China’s Xinjiang province.

In addition, the Australian government called for an investigation into China’s responsibility for the outbreak of the corona pandemic in 2020. That was a slap in the face to Beijing.

Annoyed, the government in Beijing therefore launched an economic war against Australia: sanctions, punitive tariffs and import bans on many Australian goods should bring the government in Canberra to its knees. There were also Chinese cyber-attacks and the Beijing government banned Chinese tourists from holidaying in Australia.

Fight against sanctions: a victory for Australia

The shock in some parts of the Australian economy was large at first. But it lasted only a short time and the sanctions had little effect. And there are reasons for that:

Some experts therefore say: the Australian economy has weathered Chinese sanctions more strongly and is now more broadly based. Richard McGregor, China expert at Australia’s Lowy Institutetold the “Handelsblatt”:

With the punitive tariffs, Xi Jinping has considerably weakened his position of power in the region. At the same time, the punitive measures inadvertently sent other countries a warning about what could happen if they did not make their economies more independent from the People’s Republic.

It now appears that China has conceded economic defeat. Xi Jinping spoke with Australian Prime Minister Anthony Albanese in late 2022 after a long freeze in bilateral relations.

Both countries have since tried to improve their relations and China has lifted many of the sanctions. In a few months of 2023, trade between China and Australia even reached record levels again. For Xi, an admission of his own defeat.

“The economic situation in China is not good and the problems continue to grow,” said China expert Klaus Mühlhahn in an interview with t-online. Youth unemployment is high, many cities have not yet recovered from the corona pandemic and are heavily indebted. “This is causing concern and China is now realizing that this aggressive foreign policy behavior is not entirely in line with economic realities.” This is another reason why China is currently interested in normalizing relations with Australia.

China has no allies

Nevertheless, Australia remains suspicious, which is particularly noticeable in the military field. Australia is arming en masse and the government only announced military reforms in April. The military is being re-equipped for the use of missile technology. Missiles are planned with a significantly longer range than before. In addition, Australia buys submarines from the US.

Australia’s fear of China is justified. After all, the People’s Republic now has the largest navy in the world and Beijing signed a security agreement with the Solomon Islands in 2022 – to intimidate Australia. From there, the Chinese Navy was able to blockade, monitor and control Australian waters.

Shipping routes are the Achilles heel of the Australian economybecause it depends on oil imports. So if China closed sea routes, it could cripple Australia’s economy within weeks.

But Australia has a decisive advantage: it has strong allies such as the US and Britain, while China’s aggressive foreign policy in recent years has created widespread distrust in the region. Xi has no alliance that strengthens China’s foreign and security policy, increasingly isolated.

Ultimately, Australia will benefit. The koala not only managed to resist the dragon. As a regional power in the Western alliance, the country is increasingly becoming a geostrategic partner of increasing importance. Especially as a counterweight to China.

Sources

(t-online/dsc)