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Containment, Hedging and Wedging : A Forward Agenda for Labor and China

Geoff Raby

By adopting a small-target stance on China policy, Labor has surrendered agency over the most important element of Australian foreign policy. The Coalition has effectively wedged Labor on China which has seen Labor implicitly following the Coalition down the path of seeking to contain China. Labor through its silence on China policy has been complicit in the shift by the Australian Government from constructive engagement with China to treating China as a strategic competitor, in effect as an enemy.

Contrary to the misguided small-target strategy, the Opposition can and should challenge the government on its China policy without being wedged. Labor also has an obligation to advance constructive foreign policy alternatives.

Australia’s changed policy towards China under the Coalition has occurred without serious domestic discussion. Labor’s silence has added to the democratic deficit Australia has experienced under the Coalition government.

From engagement to containment or, how we have made an enemy out of a friend

The profound change in Australia’s stance towards China is best understood in the context of the greatest power shift that has occurred in modern history. China’s rapid economic ascendency accompanied by a massive expansion in its military capability challenges US pre-eminence, especially in the East Asia Region. As the dominant power, it is to be expected that the US will seek to resist the ascendent, challenging power.

US policy makers seem to have gotten a serious case of buyers’ remorse. Naively, many in US foreign policy circles on both sides of the House believed that as China’s economy developed and its middle class expanded, the political system would become more liberal and convergence would occur towards a set of international norms, as defined by the US-led West.

The clearest policy statement on this was made in 2007 by former Bush Administration Deputy Secretary, Robert Zoellick when he called on China to become a “responsible stakeholder” in the international system. This, by the way, was enthusiastically taken up by Australia’s then Prime Minister Kevin Rudd. The problem for Zoellick’s formulation, however, was that he was calling for China to become a responsible stakeholder in a US-led global order, in a system which China had played little or no part in building. Zoellick was effectively locking China into a secondary role in the world order, not as an equal partner or even leader.

This was probably the height of the US unipolar moment as the unchallenged leader of the world order. From then, China continued to expand its economy through the Global Financial Crisis (2008-10) and subsequent financial shocks without faltering. Faced with the ever- growing economic and military might of an ascendent but non-liberalising China, policy makers from the early years of the second decade began to reassess China and came to view it as a threat to US hegemony.

The shift from engagement to containment of China became fixed during the Trump Administration. The Administration’s National Security Strategy of October 2017 clearly stated this change in stance towards China, now viewing it as an enemy.

At the same time, the Australian Government produced its much over-hyped Foreign Policy White Paper which spoke only in terms of engagement and cooperation with China. Australian officials would have been well briefed on the change in the US’ official position but the China hawks in Canberra, aided and abetted by The Australian Strategic Policy Institute (ASPI), had not yet completed their takeover of foreign policy.

This was to change quickly, assisted by China’s own actions. Whatever the merits one way or the other, China chose to reject the Hague Court of International Arbitration’s decision on the South China Sea. China responded, upping the ante by expanding its constructions on rocks and atolls. It behaved more aggressively around the Diaoyu/Senkaku Islands, and to its ultimate detriment, adopted a form of hostile diplomacy which has become known as “wolf warrior diplomacy”.

China also passed legislation requiring all Chinese firms overseas to support China’s national security, cyber-attacks attributable to China increased, and foreign domestic interference activities were ramped up. Science and technology transfers to China were pushed through both overt and covert means.

China’s own behaviour – real, exaggerated and publicised now when in the past it did not warrant comment – was used to demonise China in the media and by senior government ministers to justify the switch in policy.

The policy change was not inevitable but, under a conservative government which saw rich political opportunity in burnishing its credentials on national security, Australia would most likely follow the US and Labor would be supine when the government went down that path.

Containment Vs Hedging

The policy of Containing China cannot achieve its ends when dealing with a country of China’s size, geopolitical centrality, and deep integration into the global economy through trade, investment and infrastructure. Instead of following the government into this policy, the Opposition could have presented an alternative policy framework based on a hedging strategy.

Containment and hedging may seem like a distinction without a difference, but in fact they are very different. Containment essentially rejects the legitimacy of another state’s rise. It seeks to shrink strategic space for the emerging power. It seeks to build coalitions based on military and intelligence cooperation to challenge and ultimately weaken an emerging state’s power. It favours conflict over engagement and cooperation. Diplomacy becomes a second-order consideration.

In contrast, a hedging strategy acknowledges the legitimacy of the emerging Great Power. It accommodates its rise by providing strategic space. It seeks to engage the emerging power in the provision of global public goods and as a contributor to peace and stability. But acknowledging that all Great Powers behave badly at times – the history of the Western Hemisphere, for instance, is replete with episodes of the US behaving badly in pursuit of its interests – it seeks ways through cooperation between states to raise the costs for bad behaviour by bigger powers.

Hedging strategies should be explicit. Great Powers need to know that a push against a smaller state is a push against all others. It is important to explain that all states need to hedge against possible bad behaviour of big states, and that bad behaviour carries costs and good behaviour encourages cooperation.

A forward foreign policy agenda

For Australia, the principal focus of a hedging strategy should be South-East Asia, by working both with individual states and with the Association of Southeast Asian Nations (ASEAN) as a group. This is what former Prime Minister Paul Keating started to do when he signed the bilateral defence pact with Indonesia in 1995. Keating has subsequently explained that this was to be the first building block in a regional defence against China.

Prime Minister Turnbull returned to this with what was a remarkable but underappreciated act of diplomacy when Australia hosted the ASEAN-Australia Special Summit in March 2018. Ten, even five years earlier, the idea of holding an ASEAN summit in Australia would have been laughable among policy circles in both ASEAN and Australia. What had changed this, was, of course, the rise of China.

In recent years, the Australian Government has sought to engage more closely with individual ASEAN members, such as Vietnam, as part of its push against China. Herein is a certain irony that the Morrison Government has embraced a one-party, authoritarian, communist state with a dreadful human rights record to press against a similar state.

Part of a Labor Foreign policy agenda should be to advocate for eventual Australian membership of ASEAN. While valid arguments can be made on both sides, Labor should at least be promoting vigorous national debate on this. It could be done so without risk of being wedged.

Beyond ASEAN, Australia and the US have sought to lock-in India to help them balance China. The slogan a “free and open Indo-Pacific” is code for getting India to help contain China. India has been a reluctant recruit and, although it has embraced other containment activities such as the Quad, it has done so only recently, and in response to clashes with China along its disputed border.

At the same time, it has become a member of the Chinese-led Shanghai Cooperation Organisation. It was one of the earliest members the Asian Infrastructure Investment Bank and remains today one of its largest developing country contributors. India will continue to balance China and the US and not fall too closely in behind either. It will have little interest in Australia’s security concerns.

While welcoming ever closer bilateral relations with India and seeking forums in which to cooperate with India on trade, investment, climate change, pandemics, and security, Labor should also be realistic and acknowledge the limits on India in joining with Australia and the US in balancing China. It has its own interests to pursue and has always done so as we saw most recently at the COP26 Glasgow summit.

Australia has other opportunities to look beyond ASEAN for hedging China. Australia is closely aligned on matters of human rights and arms control with many middle powers in Europe. Until the fiasco of the nuclear submarine decision and the affront gratuitously caused to the French by the Australian Government, an opportunity existed for creative middle-power diplomacy led by Australia to have begun building an explicit coalition of liberal like-minded states to engage directly with China over issues such as human rights.

A Labor foreign policy agenda need not attack the government directly and thus avoid the risk of being wedged, but it can through articulating positive policy initiatives highlight the lacune and blind spots in current Australian foreign policy. In addition to closer ties with ASEAN, which may be institutionalised by formal membership, Australia needs to work bilaterally with individual states on defence and security cooperation. Opportunities also exist for further coalition building, drawing on Australia’s great depth of experience in middle-power coalition building, in areas such as human rights and repairing the World Trade Organisation.

Labor should also strongly support China’s recent request to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (previously Trans-Pacific Partnership, or TPP11). In doing so, it should use its support as leverage on China to lift the bilateral trade sanctions it has placed on Australia. Abandoning economic coercion as an instrument of statecraft could be a condition precedent for China’s joining. Indeed, the policy objective of bringing China into rules-based arrangements between states should be at the front of Labor’s approach to hedging and managing a constructive relationship with China.

Two other areas where Labor could be leading public discussion in Australia on foreign policy and in doing so, highlighting the government’s weaknesses, come from past Labor governments. The first is to resurrect the Canberra Commission for the abolition of nuclear weapons. This was an initiative by former Labor Foreign Minister Gareth Evans. The job remains unfinished of course and the world now is more threatened by nuclear weapons. The Canberra Commission gave Australia enormous international prestige as a constructive middle power.

The second, is a variant of former Prime Minister Kevin Rudd’s proposal for an Asia-Pacific Community. Rudd was mainly searching for a security mechanism for East Asia. This region was and remains the most dangerous in the world with potential flash points on the Korean Peninsula and Taiwan that could lead to nuclear war.

This would be hard to do, but that is no reason not to try. In the first decade of this century the Six Party Talks (US, China, Russia, ROK, DPRK, Japan) may have evolved into a nascent regional security mechanism. Certainly, Secretary of State Rice was openly ventilating such an idea. Labor should take this up with great seriousness and determination.

Of course, to do any of these things these days, it will be necessary to repair Australia’s broken relationship with China. A hedging strategy towards China based on cooperation not confrontation and which seeks to identify areas of cooperation with Beijing which are essential to advance Australia’s peace, security and economic interests would not show Labor as weak on national security, but to the contrary, attuned to contemporary realties and ready to lead Australia in the new multi-polar order.


Geoff Raby was Australia’s ambassador to China, 2007-11. His book, China’s Grand Strategy and Australia’s Future in the New Global Order, was published on 3 November, 2020 by MUP.


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