Australia caught between U.S. demands, China’s economic leverage

SEOUL, South Korea — Australia’s concerns about China’s rising might and jitters about the U.S. commitment to its Pacific allies were not eased this week in meetings between top officials from Sydney and the Trump administration.

Australian Foreign Minister Penny Wong and Defense Minister Richard Marles met Monday in Washington with Secretary of State Marco Rubio and Defense Secretary Pete Hegseth.

Canberra is concerned about the Pentagon’s review of a high-profile submarine deal and has questions about the U.S. National Security Strategy released Thursday.

Australia and New Zealand this year have witnessed clearly expanded Chinese capabilities driven by massive investments in modernizing the People’s Liberation Army Navy.

Devil in the (dollar) details

The U.S. readout of the Monday meeting was upbeat.

“This is an incredibly strong alliance,” said Mr. Rubio, noting Australia’s support for recent U.S. conflicts. “It’s a strong alliance, and what we want to do is continue to build on it.”

Mr. Hegseth said air bases used by U.S. forces in north and northeast Australia are being upgraded, “enabling additional U.S. bomber rotations,” and logistics and infrastructure in Darwin are being upgraded so U.S. Marines can conduct “rotational deployments.”

Mr. Hegseth spoke of upgrading the bilateral military-industrial base and Australian supplies to the U.S. of rare earth minerals.

The reception in Australia a day later was more downbeat.

The Sydney Morning Herald titled its piece on the meeting, “Marles refuses 12 times to say what the Americans want in AUKUS review.”

AUKUS — short for Australia/U.K./U.S. — is a trilateral 2021 defense initiative signed under the Biden administration. Its key pillar is the delivery to Australia of nuclear-powered attack submarines. The defense acquisition, at an estimated $235 billion, is the most expensive in Australian history.

Three submarines are scheduled for delivery beginning in 2032. After that, Canberra and London will design and build a new class of vessels.

Yet questions about the delivery timeline of the U.S. submarines remain unanswered.

Undersecretary of War Elbridge Colby was dubious about the provision of the submarines because of the U.S. shipbuilding sector’s inability to supply enough Virginia-class boats even for the U.S. Navy.

That led to an internal Pentagon review.

In October, AUKUS regained momentum when President Trump, after meeting with Australian Prime Minister Anthony Albanese, said the initiative was “full-steam ahead.”

The results of the Pentagon review, however, have not been released. Mr. Marles gave nothing away.

“The thrust of the [U.S.] review was about how we can do AUKUS better,” he told Australian journalists who asked repeated questions in a post-summit press conference, The Herald reported. “I don’t think it’s appropriate that I go into it more than that.”

The Australian Financial Review quoted former Australian Prime Minister Malcolm Turnbull, who focused on Canberra’s payments to Washington to upgrade U.S. shipbuilding capacities.

“To a lot of Australians, it looks like we’re paying money to the United States with no certainty at all of getting anything back for it,” Mr. Turnbull said. “If the government wants people to believe in the AUKUS project, then it needs to tell the truth about the deal, including any recent changes requested by the Pentagon and be transparent about it.”

It was agreed Monday that Canberra would pay $1 billion to Washington by the end of the year, following up on another $1 billion earlier this year to upgrade U.S. shipbuilding capacities.

Canberra is under pressure to continue paying Washington and to increase its defense spending, according to the Australian Strategic Policy Institute, a think tank based in the capital.

“Australia has resisted sustained U.S. pressure to shift defense spending toward 3.5% of GDP,” the institute’s publication The Strategist said in an analysis of the U.S. National Security Strategy. “The NSS makes clear that Washington views this position as increasingly untenable.”

With the U.S. merging security and economic domains, allies are under pressure to reduce their strategic reliance on economic powerhouse China.

The situation puts Australia “between a rock and a hard place of its own making,” The Strategist wrote. It noted that 63% of national exports in 2024 went to China, leaving Australia vulnerable to “self-deterrence driven by economic vulnerability.”

China is well practiced at using economic leverage.

In 2017, Beijing retaliated after U.S. forces in South Korea established an anti-missile system. A major Korean retailer was driven out of China, Korean auto sales in the country slumped, and imports of K-pop music were halted.

In 2020, when Canberra demanded an independent inquiry into the origins of COVID-19, Beijing responded with trade restrictions on Australian exports.

Beijing, infuriated by Tokyo’s stance on Taiwan, has quashed Chinese outbound tourism and halted imports of Japanese seafood, movies and pop music.

Why Australia needs nuclear subs

It’s not just economics. China’s power in the naval sphere has also been placed before Australasian audiences.

On Monday, it was revealed that a New Zealand naval vessel monitoring international sanctions on North Korea was shadowed by seven separate Chinese ships in the East China Sea, Yellow Sea and Taiwan Strait.

The waterways near China are under the purview of multiple naval assets.

Reports from across the region’s maritime flash points are showcasing the expanding capabilities, range and hull numbers of the People’s Liberation Army Navy.

Australia’s defense chief, Adm. David Johnson, told parliamentarians last week that Australian forces were monitoring a Chinese task force comprising a helicopter carrier, a cruiser, a frigate and a logistics vessel in the Philippine Sea.

Over the weekend, Japan was shocked when Chinese carrier-borne fighters lit up Japanese fighters near Okinawa with their target radars.

In February and March, a Chinese cruiser, frigate, and supply ship sailed between Australia and New Zealand in international waters and conducted live-fire drills.

Though the actions were not illegal, the shoot caused flight disruptions. Auckland and Canberra seemed caught by surprise at the flotilla’s appearance.

Australia’s Lowy Institute called the Chinese maneuvers “awful but lawful.” It described them as a “show of force” and “a wake-up call to China’s burgeoning blue-water naval capabilities.”

The institute wrote that the best deterrent to Beijing’s surface forces, which outgun Australia’s and New Zealand’s modest fleets, are the vessels promised by AUKUS.

“In peacetime, an SSN [submarine, submersible, nuclear] is the perfect tool to keep an eye on the operations of such a task force, while remaining unseen,” it wrote. “In wartime, the SSN is the perfect tool to send it to the bottom.”