Australia and the Rise of Geoeconomics

Abstract

In early 2015 a serious disagreement developed in the Australian Cabinet. Prompted by China’s invitation to Australia to become a founding member of an Asian Infrastructure Investment Bank (AIIB), senior ministers gravitated towards two opposed positions on how to respond. Ministers in charge of economic portfolios, led by Treasurer Joe Hockey and initially with the support of Prime Minister Tony Abbott, advocated that Australia should accept Beijing’s invitation. China was Australia’s major trading partner, and several studies had pointed out the need for infrastructure building in Asia in the coming decades. Ministers in charge of security related portfolios, led by Foreign Minister Julie Bishop, argued that Australia should demur. A Chinese-dominated infrastructure fund, they argued, could be used to build strategic footholds for an expanding Chinese power footprint under the guise of economic imperatives. Chinese behaviour had become increasingly assertive, and the United States had lobbied Australia, along with other allies and partners in the region, against joining.