Thayer Consultancy Background Brief:

ABN # 65 648 097 123

Australia Nixes ‘All the Way
with the USA’
Carlyle A. Thayer
August 4, 2020

We are preparing a report on Australia's policy toward Chinese maritime expansion.

We would appreciate any insights you could provide on the following questions:
Q1. What has changed policy-wise in the past two-three months and why?
ANSWER: Australia’s bilateral relations with China deteriorated sharply after Prime
Minister Scott Morrison called for an independent review of the World Health
Organisation and its handling of the coronavirus campaign. China has refused to take
calls from Australian ministers and has imposed several economic sanctions on
Australian exports while threatening to take more action.
China’s interference in Australia’s internal affairs has continued unabated, this
includes espionage, hacking of defence contractors, disinformation, and intimidation
of Australia’s ethnic Chinese community.
Royal Australian Navy warships have joined with the U.S. Navy to conduct exercises in
the South China Sea. Most recently a Task Force Group of five Australian warships
joined the Ronald Reagan Carrier Strike Group for exercises in the Philippine Sea. This
Task Force Group is now underway to Hawaii to participate in the Rim of the Pacific
Exercises (RIMPAC).
On 23 June, Australia submitted a Note Verbale to the Commission on the Limits of
the Continental Shelf declaring illegal the basis for China’s claims over the South China
Sea.
Prime Minister Morrison released the 2020 Defence Strategic Update and Force
Structure Plan on 1 July. Although China is not named, it is clear that the major
strategic challenge facing Australia is the modernization of the Chinese military to such
an extent that it now poses a direct threat to Australia. China’s ‘grey-zone’ activities
also have expanded across the Indo-Pacific. These involve military and non-military
forms of assertiveness such as militarisation of the South China Sea to active
interference, disinformation campaigns and economic coercion aimed at achieving
strategic goals without provoking conflict.
The Morrison Government has committed to spending AUD $270 billion over the next
decade to modernize the Australian Defence Force including its capabilities for long-
range strike. It is likely that Australia’s defence expenditure will exceed 2 percent of
GDP per annum.
 2

At the recent Australia-United States Ministerial (AUSM) consultations, Australia and

the United States signed a confidential Statement of Principles on Alliance Defence
Cooperation and Force Posture Priorities in the Indo-Pacific. A working group has been
set up to develop detailed plans for bilateral military cooperation as well as
cooperation with other states.
Darwin will become the hub for a range of new initiatives. The U.S. will fund a major
fuel reserve. Both sides will cooperate in the maintenance and repair of military
equipment and platforms. The rotational deployment of U.S. Marines is slated to take
place throughout the year, and other nations will be invited to participate in training
and other exercises.
Q2. How will any new policies in Canberra show in action, especially in the South China
Sea?
ANSWER: The Australian Prime Minister and Ministers for Foreign Affairs and Defence
have made clear through coded references to Australia’s national interest that
Australia will not “go all the way with the USA” or join in Secretary of State Pompeo’s
anti-Chinese Communist Party crusade. Australia is highly unlikely to undertake
freedom of navigation operational patrols close to China’s militarized artificial islands
if this injures Australia’s relations with China. The facts of life are that Australia is
facing a recession and the lion’s share of merchandise exports currently go to China.
Australia, however, will join the U.S. in an increased tempo of military exercises in the
South China Sea, especially if they involve third parties such as Japan, India, France
and the United Kingdom. Australia and the United States will work closely to counter
Chinese disinformation and cyber threats. Australia and the United States also will
cooperate on public health security in Southeast Asia and the South Pacific. This was
an Australian initiative to encourage the U.S. to take a leadership role in combatting
COVID-19.
At the same time, Australia will embark on a stepped-up program of engagement with
selected countries in the Indo-Pacific including Japan, India, Indonesia and Vietnam.
As Foreign Minister Marise Payne and Defence Minister Linda Reynold noted in an op
ed piece published in The Australian newspaper on 25 July, Australia will look “to
widen and deepen our friendships across the Indo-Pacific” in tandem with “our
alliance with the US.”

Suggested citation: Carlyle A. Thayer, “Australia Nixes ‘All the Way with the USA’,”
Thayer Consultancy Background Brief, August 4, 2020. All background briefs are
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Thayer Consultancy provides political analysis of current regional security issues and
other research support to selected clients. Thayer Consultancy was officially
registered as a small business in Australia in 2002.