On her recent two-day visit to India, Australian Foreign Minister Julie Bishop said of the current China-India border standoff, “My understanding is that this is a long-term dispute … Australia’s position is that territorial disputes should be resolved peacefully between the claimant countries.” This inappropriate remark reflects Australian politicians’ ignorance about the event. There are no territorial disputes at the site where the incident takes place – Indian troops crossed into China’s Doklam region illegally and refused to withdraw. Bishop’s India visit amid ongoing Sino-Indian tensions is a representative for India’s growing significance in Australia’s strategic calculus. In fact, the Turnbull administration has made no secret of its intentions to deepen security cooperation with its Indian counterpart.
Traditionally, Australian strategists have largely ignored India. But with the so-called “Indo-Pacific” strategy becoming a predominant mantra in Australia’s foreign policy, New Delhi soon became a natural strategic partner and a policy linchpin in Canberra’s relations with the region. At the same time, the South China Sea issue, regional economic integrity, and China’s Belt and Road initiative (BRI) all have pushed Australia to enthusiastically engage India – the latter is deemed as one of the few countries that can counterbalance China’s regional clout.
There is a coincidence of similar needs in India as well. Australia’s resistance to enter into the so-called “Pax Sinica” resonates with India’s self-image as a dominant regional leader and reluctance to play second fiddle to China’s BRI. Thus, Canberra’s approach was warmly received in New Delhi.
Bilaterally, Australia inked the Framework for Security Cooperation with India in 2014, and vowed to reinforce the relationship through joint military exercises, weapon sales, military training and so on. AUSINDEX 2017, a week-long joint bilateral naval exercise, was conducted off the west coast of Australia in June. Trilateral cooperation includes the Australia-India-Japan Trilateral Dialogue Senior Officials Meeting and the Australia-India-Indonesia Trilateral Dialogue on the Indian Ocean, and so on. At the regional level, Australia has proactively participated in the India-centered Indian Ocean Rim-Association for Regional Cooperation, the India-led biennial Milan exercises, and the Indian Ocean Naval Symposium. In April 2017, Canberra proposed to follow Japan’s suit to join this year’s Malabar naval exercises. Although rejected by New Delhi, this eye-catching overture is widely regarded as Canberra’s attempt to revive the Japan-initiated, China-oriented quadrilateral security dialogue among Australia, India, Japan and the US.
Scholars and commentators with Indian backgrounds have published a huge number of articles and reports which rebuke China’s regional initiatives and highlight India’s predicament of being stuck in Beijing’s “strategic encirclement.” This wording may worsen Canberra’s misjudgments about China’s real intent.
The two politically intimate partners, nevertheless, have remarkably little economic intercourse. Stimulated by the landmark Goods and Services Tax (GST) reform and the abolition of the Foreign Investment Promotion Board, the OECD Economic Outlook (2017) predicts that India will continue to be the fastest growing G20 country. However, India’s protectionist measures remain an insurmountable obstacle for Australia to seek closer engagement.
In 2016, India ranked as Australia’s sixth largest export market and 14th largest import market for goods and services, and Australia’s trade surplus amounted to AU$ 8.5 billion ($6.85 billion). This is by no means good news for the budget-constrained Modi administration. Canberra, on the other hand, vigorously seeks greater access for Australian products and services in the Indian market. A corollary is New Delhi’s lukewarm attitude toward negotiations to conclude the Australia-India Comprehensive Economic Cooperation Agreement. Indeed, India has received Canberra’s long-run complaints about high barriers in key sectors. Besides, economic cooperation is also embroiled in frequent spats over intellectual property and labor protection issues. In this vein, the two countries’ chances to be each other’s supportive partner in offsetting China’s economic influence are slim.
China respects Australia and India’s common interests in developing their “blue economy,” or maritime-based economic activity. In the mean time, Beijing is well aware that Australia is steering a course of free riding China’s development bonus, while concurrently aligning with “like-minded countries” to demonstrate muscularity. It is important to emphasize, however, that this hedge strategy may end with Australia missing enormous business opportunities generated by the BRI. Worse, it risks escalating strategic competition and further increasing the prospects for a dangerous Indo-Pacific region.