Just when China thought that it can draft new trading rules for the Indo-Pacific region through the recently-signed Regional Comprehensive Economic Pact (RCEP), India and Australia have given a major setback to the Communist nation. New Delhi and Canberra have made some serious progress towards finalising a Free Trade Agreement (FTA) which will hurt China in two ways- one, it will blunt the effect of Chinese tariffs on Australian goods and two, it will make the QUAD more powerful.
Chinese Communist Party (CCP) mouthpiece Global Times too, has realised that an Indo-Australia FTA can affect China profoundly. In a story titled, “Why India-Aussie trade talks have petered out,” the Chinese State media outlet seems to unwillingly admit that such an agreement will make China’s adversaries more powerful.
Global Times has published this story after India’s Foreign Minister Dr S. Jaishankar affirmed that talks for a Free Trade Agreement between India and Australia have gathered serious pace. FTA negotiations between India and Australia have been a long pending issue. For the past decade, the two sides have been negotiating the agreement.
However, as China’s Global Times itself reported, “the two countries have made numerous efforts this year to boost bilateral ties.” The Chinese State-owned media outlet also referred to a “comprehensive strategic partnership”, which was finalised between the two countries earlier this year.
The Chinese State media outlet also seems to understand that the embitterment of Beijing’s relations with New Delhi and Canberra are igniting closer Indo-Australia ties. Owing to border tussles, India has restricted its commercial interactions with the paper dragon.
As for Australia, the Scott Morrison government has vowed to expose Beijing for its authoritarian characteristics, and check China’s growing interference in the Australian democratic system. Beijing has, in turn, started calling Australia names and imposing vindictive tariffs on Australian goods.
In this context, a Free Trade Agreement will help both Australia and India. The two countries are part of the QUAD- an informal alliance amongst India, Australia, Japan and the US to check Beijing’s growing influence. Closer commercial relations between New Delhi and Canberra promote unique ideas like an India-Japan-Australia trilateral to kick China away from crucial supply chains.
Also, an Indo-Australia FTA can absorb much of the harm that Chinese trade tariffs on Australian goods can inflict. Earlier this year, when China slapped 80 per cent tariffs on Australian Barley imports, Canberra looked towards India to buy the Australian Barley.
Barley is just an example. The point is that if New Delhi and Canberra sign a Free Trade Agreement, then India can help Australia divert its exports towards India and destroy Beijing’s huge trading leverage over Australia.
What also concerns China is how closer economic ties between India and Australia will give the QUAD an even greater sense of cohesion and finality. Global Times itself stated, “The India-Australia relationship was a weak link in the QUAD as they lacked close ties. The current efforts from Canberra and New Delhi in deepening their cooperation can also strengthen this link.”
Beijing understands that a Free Trade Agreement between India and Australia will ensure that the QUAD is actually able to shift supply chains away from China. India and Australia were warming up to each other for quite some time. But it is the first time that China has started intimating by the prospect of closer Indo-Australia ties. And the CCP mouthpiece has even started admitting a sense of fear in so many words.