2023: The World This Year

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CWA # 899, 29 January 2023
2023: The World This Year
Australia, China and Japan: Diplomatic challenges in East Asia  

  Sayani Rana

TWTW#200, 29 January 2023, Vol. 5 No. 4

Australia, China and Japan: Diplomatic challenges in East Asia

What happened in 2022?
On 15 September 2021, the US and UK pledged to help Australia acquire nuclear powered submarines by 2030. Australia, having no domestic nuclear industry, is dependent on the US for building ‘Virginia class’ submarines. In December 2022, the congressional Research Report titled “Navy Virginia (SSN-774) Class Attack Submarine Procurement: Background and Issues for Congress” mentioned various technical difficulties in building these submarines leading to an increased expense of ASD 3 billion for each submarine. Capability of the US to deliver the submarines within time in being questioned, which pushes Australia to take independent measures to defend its boundary. 
In April 2022, China signed a security agreement with the Solomon Islands, threatening Australia’s dominance and the US influence in the Pacific Islands region. In order to strengthen its maritime security, Australia has acquired Naval strike missiles, weapon-locating radar system and smart sea mines. Australia has acquired 20 HIMARS (High Mobility Artillery Rocket System) and 41 Black Hawk Choppers from the US. On the issue, the Chinese Foreign Ministry commented that any defence cooperation should “not target any third party or come at other countries' expense.”

In 2020, China and Australia placed punitive trade restrictions on one another after Australia banned Huawei and ZTE communications over security reasons. In December 2022, inflation rose by 7.8 per cent in Australia. Therefore, to improve the economic condition, Australian defence Minister Penny Wong visited China in December. Both the countries decided on removing the trade restrictions, after which Australian iron ore, natural gas, coal and wool could freely access the Chinese market. Additionally, the Australian economy is also dependent on Chinese tourists and students. In 2019, Chinese tourists alone spent approximately ASD 10.3 billion. Therefore, maintaining good bilateral relations with China becomes essential for Australia to improve its economic health. 

Forecasts for 2023
First, an economically vulnerable Australia. Even though Australia and China, both benefited from removing the trade restriction, the effects were not unilateral. China was Australia’s largest export destination for iron, coal, and barley among other products before the 2020 trade sanctions was placed on these specific products. Australia failed to find an alternative market to satisfy its export capability while China found alternative suppliers for 70 per cent of the Australian imports. This provides greater leverage to China, while Australia remains vulnerable. 

Second, a difficult QUAD summit. The US and Japan in their 2023 ‘2+2’ dialogue cited China as an aggressor, challenging the rule-based international order. India, being the only QUAD member sharing territorial boundary with China, has always been wary of the Chinese expansionism, but hesitant to make Quad an instrument to contain China.. Australia has its own hesitations in taking measures against Chinese interests. As a result, the 2023 QUAD summit is expected to be difficult, witnessing contradicting viewpoints.

Third, Japan’s reaction to increasing Chinese influence. On 23 December 2022, Japan decided to increase its defense budget by 26 per cent for the fiscal year 2023. This would be Japan’s largest military built-up since the Second World War. Japan’s decision on enhancing its strategic defense capability is likely to increase Chinese military activity in the region, as China would see Japan as a threat. In 2023, US-Japan ‘2+2’ ministerial dialogue, the US announced on establishment of a Marine littoral regiment in Okinawa, which lies close to Taiwan. This would further escalate China’s aggression toward Japan.
Further, Japan would host the G7 summit in May 2023. This would provide Japan with an opportunity to not only strengthen its alliances with the western countries but also bring attention to the military and political developments in East Asia.

Fourth, Arms race and nuclear proliferation. On 1 January 2023, the North Korean President Kim Jong-un announced an exponential increase in the country's nuclear capacity. The Korean Central News Agency reported on the manufacturing of a new type of intercontinental ballistic missile and on plans of launching a military spy satellite. In 2022, North Korea had tested over 70 ballistic missiles which frequently violated Japan’s and South Korea’s sovereign territory. Therefore, further militarization would not only threaten Japan and South Korea’s security, but would also encourage the countries in entering an arms race.The risk of nuclear proliferation also cannot be ignored, as the US being ally with both South Korea and Japan is likely to provide extended deterrence.

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