Australia’s scheme to cut off China

Trilateral trade agreement that could change Australian relations with China

There’s a secret master plan brewing between India, Japan and Australia, which could mean bad news for Beijing and good news for our economy.

As the sands of the global geopolitical landscape continue to rapidly shift amid coronavirus and the subsequent economic crisis, fault lines in trade and diplomatic relationships have returned to the forefront once more.

For well over a decade, federal governments from both the major parties have insisted that Australia could continue to walk the fine line between its security relationship with the US and its strong trade ties with China.

But now, as Australia’s trade relationship with Beijing continues to deteriorate, Canberra is increasingly looking to reduce its heavy economic dependence on exports to China.

Recently it was announced that the Morrison government would be seeking veto powers of all public deals with foreign nations, including existing agreements made by state governments and universities.

It is expected that the Morrison government will likely use the new powers to terminate the Victorian state government’s participation in China’s ‘Belt and Road’ initiative.

This initiative is Beijing’s global infrastructure program designed to link China to the world and foster the spread of Chinese influence.

Can Australia continue to be matey with the US while maintaining strong trade links with China? Picture: AAP Image/Mick Tsikas

With a heavy reliance on China, Australia is exploring other options. Picture: Adam Taylor Adam Taylor/PMO

The Morrison government’s actions are likely to further agitate a Beijing that is already frustrated with Canberra’s increasing acts of defiance.

As tensions continue to flare across the Indo-Pacific, Australia is not the only nation looking for alternatives to help ensure the stability and security of vital supply chains.

It was recently revealed that India, Japan and Australia were moving toward a trilateral effort to ensure global supply chains and reduce their dependence on China, with the prospective pact to be called the Supply Chain Resilience Initiative (SCRI).

Informal talks between New Delhi and Tokyo have been ongoing for around a month, according to economists with knowledge of the ongoing dialogue.

Australia has not yet formally agreed to join the initiative, but talks are ongoing say sources in New Delhi and Tokyo.


With China consuming a record 48.8% of all Australian exports and the trade relationship between Beijing and Canberra becoming progressively more strained, it’s increasingly clear an alternative is required.

Beyond increasing trade between India, Japan and Australia, the initiative may have wider scope, according to Mark Goh, National University of Singapore Business School professor and director at the Logistics Institute-Asia Pacific.

“Japan has a manufacturing presence in India, traditionally through the automotive sector. While India sees this as an opportunity to enter Australia and Japan through their pharmaceuticals, and serve as a hub for Australian and Japanese products into the Middle East and Africa, which should temper China’s trading presence in that part of the world,” said Goh.

He went on to speculate that the initiative could eventually come to include the 10 members of the Association of Southeast Asian Nations (ASEAN).

The future of trade? Potential founding members of the Supply Chain Resilience Initiative (SCRI) in blue, plus members of ASEAN in red.


Unlike a garden variety trade agreement which can sometimes take over a decade to be put into place, the Japanese government is eager to bring this initiative to life as quickly as possible. With sources stating that Tokyo was in favour of launching the initiative as early as November.

Australia and India are also wasting no time, with Canberra and New Delhi coming to an agreement to work together to diversify their supply chains earlier this year.

As part of the Japanese government’s stimulus package to drive an economic recovery from the pandemic, $AUD3 billion has been set aside to incentivise Japanese companies to shift their production out of China.

Last month $AUD746 million in subsidies were offered to 57 companies to invest in production in Japan, with a further 30 companies offered subsidies to invest in operations in various South East Asian nations.

A loaded cargo ship at a port in Qingdao in China's eastern Shandong province.


In recent months, China’s increasingly aggressive posturing has resulted in multiple incidents across the region. In May and June, tensions between India and China boiled over into deadly clashes between their respective armed forces along the disputed border.

Meanwhile in the South China sea last week, Beijing engaged in the launch of missiles into the ocean, including what Chinese sources call an “aircraft-carrier killer” missile as a ‘warning to the United States’.

The incident is reminiscent of the missile tests and provocative missile launches undertaken by North Korea over the past few decades, rather than the normal displays of strength analysts have come to expect from Beijing.

The Royal Australian Navy and the US Navy during operations in support of security and stability in the Indo-Pacific region. Picture: U.S. Navy photo by Mass Communication Specialist 3rd Class Nicholas Huynh/Released.


With the geopolitical landscape continuing to evolve with each passing day, Australia now finds itself at a crossroads that may help define its economy’s future.

On the road behind us, a problematic and heavy reliance on a single at times belligerent trade partner consuming almost half of all Australia’s exports.

On the road ahead, the opportunity to become a founding part of a pact that could potentially alter the global balance of economic power and begin to reduce Australia’s reliance on Beijing to drive its economy


Australia likes to remind the world its own importance, that our little corner of the South Pacific matters to global affairs. With the advent of this potential pact, it may get that chance.

Australia may have a unique opportunity in its midst to seize control of its destiny on a global stage, to become a founding part of something greater.

This in turn could drive the recovery of our economy and begin to reduce our dependence on Beijing once and for all.
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