The following article was first published as a contribution to the Henry Jackson Society report, 'Breaking the China supply chain: how the 'five eyes' can decouple from strategic dependency.' Click here to read the report. 

Australia is a regional power with global interests. As the COVID-19 pandemic has spread across the world, Australia has protected not only the lives and welfare of its own citizens, but also worked with other nations as part of an international response.

Australia has invested in the global search for a vaccine, we have supported our neighbours in the Asia Pacific with vital medical supplies and joined in an Austrian-led group of ‘first mover’ nations including Denmark, Norway, Israel, Czech Republic, Greece and Singapore to share knowledge on how to chart our way through the crisis.

Australia has also played a prominent role in co-sponsoring the recent motion through the World Health Assembly that established an independent review into how COVID-19 began and spread throughout the world. Such a move was consistent with Australia’s values.

Prime Minister Scott Morrison said that ‘countries all around the world would like to know what happened, because we don’t want to see it happen again’ and rightly that we ‘can’t let the trail go cold’.

This push for a review and transparency is entirely reasonable, given the thousands of lives lost and the vast economic and social damage inflicted upon the world. We must learn the lessons of this pandemic.

There has been a mixed response to Australia’s actions, including thinly disguised threats of economic coercion from China’s Ambassador to Australia in our national media.

But should we not be surprised by such a subversive response. In August 2019, Professor Wang Yiwei, a guest of the Chinese embassy visiting Australia, warned of the fate facing Australia if it did not renounce its reliance on the US.

He predicted that Australia might experience the tragedy of being the “first sacrifice” in a new cold war between the US and China. Implicit was the message that Australia’s sovereignty, alliances and interests needed to change.

The seriousness of Australia’s position is coming to light. The research within this report by the Henry Jackson Society demonstrates that Australia is the Five Eyes nation with the most strategic dependence on China.

It makes for troubling reading. Australia is dependent on China for material and goods critical to our resources, construction, agricultural and manufacturing industries. We are also dependent on China for pharmaceuticals, fertilisers and medical supplies. In short, Australia is dangerously exposed.

But there are reasons for hope. The reality is that Australia began pivoting to secure our sovereignty in 2017, as events in the South China Sea revealed to the world a revisionist and expansionist national agenda. We have been forced us to set clear boundaries in one of our most important economic and trading relationships.

In 2017, Australian legislators from across the political spectrum opposed the ratification of the Chinese extradition treaty. Whilst controversial at the time, the Australian government shelved the treaty and this decision prefigured Hong Kong’s own resistance to the same legal mechanism.

In 2018, the Coalition government secured the bipartisan passage of the Espionage and Foreign Interference Act. This legislation modernised our criminal code to disrupt the subversive tactics of authoritarian regimes, who use covert means and plausible deniability to advance their strategic aims. Importantly, this included a new offence of criminalising the theft of trade secrets, protecting Australian businesses and intellectual property from economic espionage.

The Australian government also took the tough decision to secure our 5G network, our political leadership presciently recognising that democratic digital sovereignty is a prime target for authoritarian regimes. And our critical infrastructure and assets are now closely monitored by government on a central register, designed to the monitor threats of espionage, sabotage and coercion arising from foreign investment.

Sovereignty, however, must also be safeguarded by transparency. Middle power democracies, like Australia, must protect their public square from foreign interference and malign foreign influence. The public must have faith in the integrity of its political leaders and governing democratic institutions. That is why we have banned foreign donations in our electoral system, and have legislated to require those lobbying on behalf of a foreign entity to register on the Foreign Influence Transparency Scheme.

There is more to be done, however. We must be alert to the reality that authoritarian regimes don’t play by the rules. This is nothing new. As Roman Poet, Horace, once wrote: “You can drive nature out with a pitchfork, but she keeps coming back.” We must see the world as it is, not as we wish it to be.

Global politics is a realm where irony, paradox and dark shadows abound. We must stay grounded in the realities of history: human nature, self-interest, geography and power shape global markets as much as anything else. Australia’s free market and national enterprise is undermined when authoritarian trade partners stack the deck against us. As the rules-based global order comes under greater pressure from revisionist powers, Australia’s sovereignty and strategic resilience will be tested in new ways.

Our strategic dependency on critical imports makes us vulnerable to not only economic coercion, but also supply chain warfare. To mitigate this risk, the Australian government should initiate a review of all trade-exposed products, industries and sectors in the economy.

This should be broken down into three main categories. First, goods and material on which we must be self-reliant in times of crisis and consider it prudent to guarantee domestic supply. Second, goods and material for which we are too dependent on authoritarian governments for their provision. Finally, those things for which open, global supply chains should be maintained and encouraged. This will help to establish a clearer picture of our supply chain vulnerability and then drive policy to mitigate those risks.

The Australian government should also consider a strategic industry plan to build national self- reliance in key pharmaceuticals, medical supplies and other critical goods. Certainty should be provided for business to establish local operations and jobs. Encouraging firms to build and expand domestic production capacity will require government support, such as time limited tax incentives. This should be a bipartisan effort.

Sovereign nations must be able act freely on the world stage. Australia has shown that it is possible for middle powers to assert their sovereignty. Our task now is to build our strategic resilience with likeminded partners in the Five Eyes and beyond.