• 3 minutes e-car sales collapse
  • 6 minutes America Is Exceptional in Its Political Divide
  • 11 minutes Perovskites, a ‘dirt cheap’ alternative to silicon, just got a lot more efficient
  • 41 mins How Far Have We Really Gotten With Alternative Energy
  • 2 hours Bad news for e-cars keeps coming
  • 12 days What fool thought this was a good idea...
  • 10 days A question...
  • 4 hours The U.S. Is Determined to Revolutionize Its Microchip Industry
  • 14 days Why does this keep coming up? (The Renewable Energy Land Rush Could Threaten Food Security)
  • 15 days They pay YOU to TAKE Natural Gas
The High Cost of Moving Industry Offshore

The High Cost of Moving Industry Offshore

Offshore industrialization is facing mounting…

John Daly

John Daly

Dr. John C.K. Daly is the chief analyst for Oilprice.com, Dr. Daly received his Ph.D. in 1986 from the School of Slavonic and East European…

More Info

Premium Content

China Warns Australia to Choose "Godfather" - China or U.S.

China Warns Australia to Choose

It is rare in diplomatic circles for governments to speak bluntly, particularly in the Orient, where manners are highly prized.

The exceptions to this rule are retired military officers, who are often able to voice sentiments too impolitic for other channels.

One of the more startling pronouncements in this vein occurred last week when Song Xiaojun, a former senior officer of the People's Liberation Army, warned that Australia cannot juggle its relationships with the United States and China indefinitely and "Australia has to find a godfather sooner or later. Australia always has to depend on somebody else, whether it is to be the 'son' of the US or 'son' of China. (It) depends on who is more powerful, and based on the strategic environment." Noting the rising importance of China as an export market Song added that Australia depended on exporting iron ore to China "to feed itself," but "Frankly, it has not done well politically."

What is also notable about Song’s remarks is that they coincided with Australian Foreign Minister Bob Carr's first official visit to China, where Foreign Minister Yang Jiechi urged Australia to dismiss its alliance with the United States, a decades-old bipartisan and central pillar of the nation’s foreign policy, as ''the time for Cold War alliances has passed.''

The year 2012 is significant for the two nations, as it marks the 40th anniversary of the establishment of Australian-Chinese diplomatic relations.

Australia is one of the few countries to actually run a trade surplus with China, which for the period January-November 2011, amounted to $15.15 billion, a 274.2 percent increase over 2010. Last year Australia-China bilateral trade rose to $80.73 billion, up by 44.2 percent. Australia’s exports to China were worth $47.94 billion growing 59.7 percent over the previous year, accounting for 25 percent of Australia’s total exports. Last year Australian imported $32.79 billion of goods from China.

China is now Australia’s largest trading partner, as well as its single biggest export market and import source, while Australia is now China’s seventh-largest trading partner. While iron ore is Australia’s single largest export item to China, worth $35 billion in 2010, energy exports are also significant as in 2010 Australia exported 17 million tons of coking coal to China, accounting for 37 percent of China’s total coking coal imports, a trade that is expected to increase by around 20 percent by 2015 as new mining and infrastructure investments in Queensland and New South Wales come online.

Such trade can only increase in the future, as both Australia and China are moving towards concluding a Free Trade Agreement.

What has been rattling the Chinese leadership are recent remarks by the Obama administration that the Pentagon will shift its focus to Asia. Last month the first contingent of 2,500 U.S. Marines to be deployed in the country arrived in the northern city of Darwin. China criticized the deployment as proof of a "Cold War mentality," but worse may be to come, as Australia has indicated it may also allow the United States to use its territory to operate long-range spy drones and reportedly station aircraft carriers and nuclear-powered attack submarines in the western Australian city of Perth.

A further trade card that China can play against Canberra is the strong growth of Chinese investment in Australia over the last several years. For the period 2007-2010, the Australian government approved over $50 billion in Chinese investment, including in businesses and real estate.

So, stripped to its essence, the Chinese government has some significant economic cards to play against Australia deepening its defense ties with the U.S. What is most notable about China’s new policy as embodied in Song’s remarks is that it represents a new level of Chinese diplomatic “pressure,” which up to now has been primarily limited to expressing their “concerns” to their Asian neighbors over the status of the South China Sea.


So, for Australia, which will it be, Beijing or Washington? Probably the one that makes Canberra “an offer it can't refuse.”

By. John C.K. Daly of Oilprice.com

Download The Free Oilprice App Today

Back to homepage

Leave a comment
  • Fulverin on May 23 2012 said:
    Australia will choose Usa
  • Roland on May 23 2012 said:
    What other countries in the region have chosen alignment with China? There's North Korea, and maybe Myanmar, though not so much anymore, and...that's it. Every.Other.Country in the region has conflict with/fear of China.
  • Legal Bandit on May 23 2012 said:
    To quote all financial investment material: 'past performance is no guarantee of future returns'. This is relative to how far back you look of course.

    We are entering a (re)new(ed) world order, in so far that China has grown up these last 200 years and is in the process of regaining its premier position.

    Australia is all about serving it's own best interests as it should, just because she has had a special relationship with Uncle Sam, does not mean she is not averse to considering another sugar daddy. However, I suspect like any cunning vixen, or dingo-ette, she will keep both warm which ironically will keep both in a neutral position and lead to greater stability in the region.
  • erevolu on May 23 2012 said:
    The biggest authoritarian regime in the world wanted to kidnap Australia by threatening to ban importing ore material from Australia. What a "good" play!
    It is high time for leaders of US to shift foreign policy with autocats.

    Power tended corruption, absolute power corrupts absolutely. Corruption is very, very serious. Common people is bullied, oppressed and persecuted by corrupted cadres without any place to petition except black and blue in black jail, even losing life. In china, officials, judges, prosecutors are often in close relation with evildoers and perpetrators.
    For example, Sun yulei, an official of Department of Health of Zhejiang Province in china, indeed, managed and sent defenders of the accused to pose as officials of Department of Health of Zhejiang Province and to swindle and threaten the victim Y who was persecuted and framed by evil cadres of Taizhou municipal hospital, losing his already worked 18-years of job and social security.
    In that case of persecuted and framed, Tao xiulin, a vile cadre of Taizhou municipal hospital, with other dirty cadres, transferred his responsibility of himself failure to medical experimental treatment in a patient onto the victim Y, by means of fictional facts and concealing the truth.
    According china's criminal law, Sun yulei and his complice, Tao xiulin and other rogue cadres of Taizhou municipal hospital, had already constituted a misconduct crime, a fraud crime and a crime of infringing citizen’s rights and social security, and so on.
    But prosecutors of the Procuratorate of Zhejiang province didn't charge these devils. Sun yulei, still as an official of Department of Health of Zhejiang Province, continues to injure and damage common people’s interests in Zhejiang Province of china. Tao xiulin and other evil cadres of Taizhou municipal hospital continue to hollow state property of the hospital?to secure a big mount of drug rebate and to commit sordid and despicable things to wrangle and fight with common patients in Taizhou city, Zhejiang Province, china.
    It could be said that vile cadres of Taizhou municipal hospital are not so much as so-called to cure diseases for patients as to greed kickbacks from drug to make medical condition worse, even killing patients.
    Just on March 21 this year, the vile cadres of Taizhou municipal hospital in Zhejiang Province of china intended to shift burden of one medical death case of a 10-month–old infant onto other hospital in Taizhou city.
    In 2010, an amazing case, well-known as the first cut throat in Chinese hospital, had happened in the hospital where the patient D alleged surgery in Taizhou municipal hospital to cause atrophy of his testis, however claim be refused roughly, that the patient D was so angry to pick up a knife to cut the surgeon’s throat.
    Obviously like organized crime, villains of Taizhou municipal hospital play tyrants in a locality to injure cruelly patients and others to seek illegal benefits, shielded under umbrella of officials, like Sun yulei, an official of Department of Health of Zhejiang Province.

    Please all with good conscience copy and post.
  • ZOmbieDawg on May 23 2012 said:
    Such trade can only increase in the future ?

    What a load of....
    China's economy is going down for many reasons, so are their 2 biggest customers namely Europe and the USA, so how exactly is trade going to increase in a collapsing global economy ?

    Sounds like Gillard government rhetoric again..
    Given the chinese buy-up of Australia and its resources at the expense of Australians, and allowing for the ANZUS treaty, it seems clear China will not be the choice.
  • John on May 23 2012 said:
    I have stated that Australia should adopt a third posistion as a netural country with a honest broker policy towards both the USA and PRC.We do not need to be locked into alliances that bring us into confilct with anyone Sweden and Switzerland a good examples to follow.Australians have a choice of being dragged into future regional conflicts or working to prevent such conflicts as an honest broker.Unfortunatley China and the United States of America are heading towards War in north Asia.Australia,Japan,South Korea,and the phillipines must work together to ease regional tensions .
  • Karl on May 23 2012 said:
    I'm Australian and I think we need to ditch the US, as they're economically screwed.

    There is going to be a pole shift of both economic, political, and military power to China in the next couple of decades, and I have no intention of being on the negative end of that boom.
  • val on May 25 2012 said:
    well china has banned exports of rare earths, although it is a member of WTO and i think has a free trade agreement with the US and Japan. Their rationale was that rare earths are a limited resource, and anyone who wants to use them has to make factories in china. So australia has all this iron ore, it is exporting it, while steel production is in decline. So why doesn't australia give china some of its own medicine, and limit the export of iron ore to, say 10%, of annual output? Australia has coal, it is only logical they will be better off with the added value and jobs of producing steel instead of exporting iron ore and coal to china. Ban exports, screw china and US, if anyone wants steel, build steel mills and export steel, simple as that. Australia should not be content with being a simple resource mine.
  • val on May 25 2012 said:
    times are a-changing
  • Matt on May 27 2012 said:
    People miss the point, neither is going to concede space to other willingly it is two superpowers same as the USSR an the US. And they will take it to the brink. Australia can't leave the US, you don't have a choice, they may betray you but you can't leave.

    The problems with Pakistan is because they felt betrayed by the US. These guys in the ISI they are more British than English, they are not radical, they use radical, but they drink scotch, tea, country club, tally ho. The drama with Russia are over the collapse of the USSR, China is it is because they seek to prevent them becoming a superpower. The US has a lot of enemies. It is not a conspiracy, other than Chavez wanting one, it is independent states with various reasons to be hostile to the US. As a superpower you have to be strong enough to withstand it.

    The best Australia can do is scrap the whitepaper which they did, to single to the PRC they do not see them as a threat, if they want deescalate. What the whitepaper did was set off an arms race, that conflict buffer between an enemy and you. If you say the US or China lose to each other in war we are all dead anyway.

    That was the real reason the Chinese did not like it, it makes life more difficult for them. They took offense to it also. But the if the US seeks a war or the PRC do there is nothing the Australia can do. They argue over ANZAS an Taiwan.

    So it is a freight train that will lead to war, nuclear war. It is not how the state collapses whether soft power or hard power, it is the result and the result to such a threat is a nuclear response.

    That was the case in 1991 with the USSR, it is the case with Pakistan if they collapse if they do not get Afghanistan back broken arrows lose. With China is a nuclear war as was the risk with Russia, regardless of how it collapses soft or hard power. It is the same as the US saying they will nuke people over cyber-attacks.

    So both need to be contained to provide strategic space for the other, otherwise it is nuclear war. The environment has to be one that prevents a confrontation. That is a multi-polar world, that is what the term means.

    When the USSR collapsed it allow unbridled US influence and action during the period after. That is how the US ended up in Iraq. When you are a superpower you do not have to admit mistakes, which allows you to continue to make them an in the end that will bring down an empire. If a superpower is contained by another power that can't happen.

    Look at this way the US is likely to quietly exit Afghanistan and Pakistan will take over in a period of time so that the risk of collapse does not occur no broken arrows. The LCS which are not really built for war will make up a large percentage of the US navy. For flying the flag little else.

    You will see base closers like in Japan, government change like the Arab Spring one day the US will have may be one or two bases in the Mid East, maybe none.

    It is all done quietly but it provides space. That requires the PRC to also be reasonable in relation to their aspirations. Fighting constant war builds empires but it also destroys them.

    The US was heading to war with China pre-9/11, then they got diverted by Afghanistan and then by Iraq. The US has declined in those decades which has also provide space an made war between the US and China less likely. They will be more cautious about a war with the PRC, an so should PRC because a declining US is a dangerous thing as they would use nuclear warfare.

    The US has provided some space to the PRC, not of it own choice, Guam, all the may back in Australia, LCS ships. They will continue to decline and provide more space. Same thing in Europe for the Russians. Because Iraq was a mistake it gave Iran nuclear weapons (unless they get bombed) and Iraq as new state, they will have to make some space in the Middle East for the Iranians.

    If it was not for Russia, Iran and Pakistan would leave NATO stranded in Afghanistan cutting the supply of logistics. Stuck between 3 nuclear powers landlocked, 4 if you count China. And you want to be happy that Russia is a quasi democracy because the logistics is unpopular. That is one of the reasons United Russia is unpopular and Communist and other gained in the polls.
  • Alex on May 31 2012 said:
    Australia has economy at stake in Asia but
    an ally with US in military. that's a dilemma.

Leave a comment

EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News