Australia to China: ‘We don’t trust you’

Australia to China: ‘We don’t trust you’

The news cycle often gets caught up on the little things.

We see the same headlines day after day. The same story regurgitated across various news sites.

Well, today I’m going to talk about something other than crumbling apartments, public funding campaigns masking the real agenda, and union bosses abusing their powers.

See, while our papers are fixated on the same old stories every day, there’s a years-long battle playing out.

Australia may be losing its safety net…and we aren’t even paying attention.

We started it

It all began seven years and four prime ministers ago.

Then Prime Minister Julia Gillard said China’s telecommunications company Huawei wasn’t allowed to be part of our NBN infrastructure, under the guise of national security.

Then last year, we got up China’s nose a little more.

We booted China out of building a subsea cable network from the Solomon Islands to Sydney, effectively preventing any Chinese company from landing a subsea internet cable directly to Australian shores.

To top it all off, this year we said that Huawei — once again — was not welcome to be part of Australia’s 5G network.

This was a signal to China.

While we’re happy to sell things to China (like houses and rocks), we don’t want China to build our infrastructure.

In essence, we’ve told the Chinese that we don’t trust them.

We’ve picked a fight with our biggest trading partner without even realising it.

And in turn, it’s given us a whole bunch of new problems to deal with.

The match is in our backyard

With such a persistent lens on the US-China trade war, most of us are missing a growing development: China building military bases throughout the South China Sea.

Those waters are pretty close to us.

They are also vital passages for international trade.

The militarisation of the islands in the South China Sea is putting an increasingly assertive China one step closer to Australia.

More to the point, there’s an increasing number of incidents surrounding Chinese naval ships.

In October last year, there was the ‘incident’ with the USS Decatur warship.

Chinese military ship Lanzhou and the USS Decatur came within 41 metres of each other while trying to navigate waters.

There was no damage or human injuries for either ship. And by the US Navy’s account, the situation was never upgraded to an ‘in extremis’ event.

It was more a case of the Chinese warship failing to give right of way to the US ship, according to The Interpreter:

Lanzhou came upon the American ship from astern, making it the “burdened” vessel under the International Regulations for the Prevention of Collision at Sea (COLREGS), passed up Decatur’s port side and moved ahead on a slowly converging course that would have eventually crossed ahead of the Decatur’s track.

International media outlets — as well as Australia’s — did play up the incident.

While it was nowhere as dramatic as we were first led to believe, it does go to show that China isn’t afraid to flex its military muscle.

The problem is, it didn’t just stop there…

Maritime militia

All’s quiet on the eastern front?

Well, not really.

There continue to be ‘incidents’ whereby China is not afraid to show off its newfound strength.

There are continuous reports of Chinese commercial fishing boats anchored and clustered together, although commercial fishing experts say no equipment from these boats is being deployed. And more to the point, commercial fishing doesn’t happen with several boats huddled together.

These fishing boats are suspected to be ‘maritime militia’. To make matters worse, Beijing officials aren’t doing anything to denounce their presence.

This has sent the rumour mill into overdrive. Last year, the Lowy Institute suggested these boats are actually intelligence-gathering operations.[1]

If Chinese authorities won’t denounce the activities of these boats, then surely they must be state-supported’ go the whispers.

Perhaps they are.

The problem is that the purpose of these boats is shrouded in secrecy.

To make matters worse, four weeks ago, Australian Navy helicopter pilots were hit with laser beams, suspected to be part of China’s ‘maritime militia’.

Then just last week, a Chinese ‘fishing’ vessel collided with a Filipino fishing boat, leaving 22 Filipino fishermen stranded in the sea until they were rescued by a Vietnamese crew.[2]

Ignoring international laws

The growing presence of US, Chinese and Australian naval ships is largely being ignored by the press. It’s only the odd story here or there that makes the headlines.

Yet Australia has significant interest in the South China Sea.

For starters, it’s one of the oceans that connects us to the rest of the world.

The South China Sea accounts for almost 25% of our two-way trade.[3]

And this patch of water was once the natural buffer between ‘us’ and everyone else.

Technology advancements and China’s hunger for power are encroaching on that.

Think of the South China Sea as the moat to our castle.

Since the 1980s, we’ve regularly conducted airborne surveillance in the area, with US naval ships enforcing ‘right of passage’.[4]

Yet Beijing authorities claim sovereignty over the area. Specifically, China reckons it is entitled to the estimated 11 billion barrels of oil and 190 trillion cubic feet of natural gas under the ocean floor.

But by claiming that, China is completely ignoring the claims of Brunei, Indonesia, Malaysia, the Philippines, Taiwan and Vietnam.

Three years ago, the Permanent Court of Arbitration (PCA) ruled against China’s claim to these waters. Even though China has signed the Hague treaty, it refuses to accept that its claim was ruled against.  

Preparing for the long run

What’s happening in international waters can’t be ignored.

The South China Sea is vital for a quarter of our two-way trade.

Perhaps more importantly, though, movements in the waters affect our national security.

You might not read about the increasing military tensions every day.

But know that something is happening.

How much or how quickly the threat escalates remains to be seen.

We’ve been following this story at Strategic Intelligence Australia for almost a year. As a result, we’ve been able to position investors to prepare for the worst…while selecting the types of investments that may even grow if more serious events happen. 

What’s happening isn’t going away.

As China continues to display military strength in international waters, we will continue to find ways to help Aussie investors prepare for the inevitable fallout. Click here if you want to join us.

Until next time,

Shae Russell Signature

Shae Russell,
Editor, The Daily Reckoning Australia