A middle power diplomacy

Abstract

While the economic relationship between Australia and China is largely asymmetrical, Australia possesses a degree of leverage over China as 1) Australia is Chinas largest coal supplier and 2) China needs coal for her consistent domestic economic growth. Along with the coal factor, the fact that Australias economic dependence with China has not yet replaced her traditional economic partners, US and Japan, enables Australia to pursue her reciprocal accommodation model, where she separates her politics from the economy so as to strongly react against Chinas assertiveness. In fact, although Australias economic dependence on China has deepened since 2000, China has only partially replaced the position of the US and Japan in the realm of merchandise trade, as its trade commodities lack in diversification. Moreover, China still has a long way to replace the role of US and Japan in the realm of service trade and investment, all of which come together to provide Australia with a larger diplomatic room to pursue her own and unique strategy towards China.