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Across the Economic Belt three corridors have been developed or planned to underpin the investment deal between China and the European Union, and three more secondary corridors linking locations in the country\u2019s western region to ports on the coasts of Pakistan, the Indo-China Peninsula and the Bay of Bengal. While these developments mostly affect India\u2019s position, they do influence Australia\u2019s economic interests, particularly in the Indo-China Peninsula encompassed by the Association of Southeast Asian Nations (ASEAN).<\/p>\n\n\n\n
These interests have been affected by the United States\u2019 adoption of an over-militarised approach to foreign policy and unwillingness to prioritise overseas infrastructure development. This situation has allowed China to strengthen its connections through its Belt and Road Initiative among poorly articulated mainland countries, notably Cambodia, Laos, Myanmar and Thailand and, with reservations, Brunei, Indonesia, Malaysia and the Philippines. Nevertheless, Vietnam has been offput by China\u2019s aggression and ruthlessness in pursuing its policy ends that trample over the legal rights of countries bordering the South China Sea. Support has been sought from Australia, Japan, India and the United States that, in turn, have issues not only with China, but also, like South Korea, with North Korea\u2019s military aggrandisement.<\/p>\n\n\n\n
The gateway ports at the end of the Eurasian corridors, underpinning China\u2019s emergence as a naval power, are linked into the Maritime Silk Road\u2019s four blue economic passages from China: the western line via Suez to the Mediterranean; the southern line to Australasia; the northern line to the Arctic; and the eastern line to Latin America and the Caribbean.<\/p>\n\n\n\n
Australia\u2019s Indo-Pacific policy has been conscious of China\u2019s rivalry with India in the western line. However, Australia\u2019s immediate concern has been with the southern line encompassing the South China Sea, the Pacific archipelago and its extension to Antarctica.<\/p><\/blockquote>\n\n\n\n
This line cuts across the United States\u2019 three island security chains \u2018containing\u2019 China, abuts Japanese strategic interests and its potential naval port developments concern Australia. Paradoxically, Canberra has eschewed any involvement in the Belt and Road Initiative, but Darwin, Newcastle and Melbourne appear among its list of 42 ports in 34 countries, and since 2018 the State of Victoria has a Memorandum of Understanding (MoU) on the Initiative with Beijing. While considering how to react retrospectively to this involvement, Australia has been swept into the global pandemic and Canberra may need to reconsider its position while seeking a better economic destiny.<\/p>\n\n\n\n
Post-March 2020: A world in decline<\/h4>\n\n\n\n
By the end of 2020 China\u2019s economy had already recovered from the pandemic. Despite the country\u2019s trade war with the United States, its gross domestic product exceeded 2019 levels supported by government-led investment and increased demand for its industrial goods. During 2021 the decline in world trade is expected to continue and even big economies will struggle to recover from the pandemic. Despite cushioning by monetary policy and a fiscal stimulus, these countries will experience job losses and business closures.<\/p>\n\n\n\n
A development-less decade may be anticipated. How will this affect Beijing\u2019s Belt and Road Initiative?<\/p><\/blockquote>\n\n\n\n
Given the adverse economic prospects, will Beijing still want to incur the debt involved in foreign infrastructure development, and will host governments still want new airports, fibre-optic cable networks, high-speed railways and seaports? Any downturn in demand for cruise ships, oil tankers and container shipping will put the demand for port facilities back a decade. Is this likely pause an opportunity for Australia to reconsider its relations with Asia before the dawn of the next normal? Should Canberra hold off on reconsidering Beijing\u2019s MoU with Victoria? While Canberra may baulk at participating along with New Zealand and South Korea in Beijing\u2019s Belt and Road project, should it consider how to deepen its participation in the region\u2019s infrastructure development?<\/p>\n\n\n\n
Conclusion<\/h4>\n\n\n\n
Australia\u2019s position in the world has been advantageous during the pandemic. But as one of the world economy\u2019s three cul-de-sacs off \u2018Main Street\u2019 linking Asia-Europe-North America, Australia is at a disadvantage, like Africa and South America, in interacting with world markets. Over time this disadvantage has diminished for Australia because the world economy\u2019s centre has tilted from a transatlantic Euro-American one towards an Indo-Pacific one with China forecast to be the world\u2019s largest economy by 2028 and India the third largest by 2030.<\/p>\n\n\n\n
Nevertheless, this handicap still persists for Australia, which will be aggravated if there is any conscious retreat from globalisation and the world is decoupled into separate orbits.<\/p>\n\n\n\n
In addressing this issue much will hinge upon streamlining air, sea and telecommunications with Asia and the quality of Australia\u2019s governance system, particularly in response to any d\u00e9tente between Beijing and Washington at its expense.<\/p><\/blockquote>\n\n\n\n
Meanwhile, there is an opportunity to follow China\u2019s lead in paying more attention to Australia\u2019s domestic logistics system. This is marked by cities straggled along a narrow east\/southeast coast corridor and a slow-speed railway system connecting south-north with only one east-west rail link.<\/p>\n\n\n\n
Can Australia do better with its supply chain to Asia?<\/p>\n\n\n\n