Globe Trotter

Flickr. Australia is a key player in the Asia-Pacific region, and a key U.S. partner there.

Octavian Report: What do you think is the real story behind the events we’ve seen in China recently? Are they really peacefully rising, or do they have more aggressive ambitions in the region?

Alexander Downer: They don't have any obvious motive for alienating themselves from the rest of the region, and so if you think it through logically, then peaceful rising is the appropriate strategy for China. There's no other strategy that makes any sense for them -- though it depends a bit what you mean by rising. They definitely see -- as their economy has now become the second-biggest in the world and is a very important economy in lots of different ways to many other countries -- that they have more status than they've had for a very, very long time, and they want that greater status to be appropriately acknowledged.

They are rising in the sense that they want to play a bigger part, and they, as they rise, will have more extensive interests as well. Their interests aren't just in Asia, but as their economy becomes bigger and more diverse, as they expand their investments and trading profile around the world, as well as rather specifically across Asia, then naturally enough their interests expand with it. They want to be able to protect their interests, particularly diplomatically. But to some extent, they want to protect their interests militarily as well.

That's a very different thing from saying that they want to provoke Asia, or to provoke the wider world. We're certainly not the wider world. They are just becoming more self-confident and more determined to maintain historic claims that they have, for example, in the South China Sea. In a sense, that's pretty understandable, as long as they don't do anything which transgresses the rules-based international system -- and so far there's no sign of that.

OR: Are displays such as the huge military parades we saw this summer more for internal consumption, then?

Downer: Oh, absolutely. They’re not naïve and they’re not silly.

OR: Do you think that there's a chance that tensions between Japan and China explode?

Downer: There are what we might in diplomacy call risks of miscalculation with Japan. There are competing claims for the Diaoyu or Senkaku islands, and they're not going to be resolved any time soon; the Chinese aren't going to concede the point, even if the world would want them to. That doesn't mean that anything much is going to come of it. These are uninhabited islands. It does mean that there is some risk of miscalculation. It's a low risk, and it's a low risk even if there was a miscalculation and some rather ugly incident that it would expand much beyond that. Probably it wouldn't. It's just worth flagging the fact that there are risks, but perhaps nothing more than that. There is historical antipathy and historical rivalry between China and Japan, and you have to acknowledge and accept that. It's not just the governments that feel that, it's felt quite strongly through the national communities -- a function of their shared history. Nothing's going to change that any time soon.

OR: Do you think Obama’s Asia pivot is an effective or well-executed strategy?

Downer: From Australia's point of view, the important thing is that the U.S. maintains its place as the key player in terms of security architecture in the Asia-Pacific region. That's our ambition, and we're glad that this administration has been focusing on relations in that part of the world and its responsibilities in that part of the world.

By the way, I think it's important to be fair here. Both the Clinton and Bush administrations placed considerable emphasis on the Asia-Pacific region, and those two presidents frequently visited the region and participated in its affairs, as did their secretaries of state and secretaries of defense and their national security advisors. There is nothing new about an American administration recognizing the responsibilities that it has to the security architecture in particular of the Asia Pacific region, and from Australia's point of view, any statements that are made reaffirming that are always welcome.

OR: Do you think the China-Australia Free Trade Agreement is going to happen?

Downer: It's definitely happening. It has to get approval of the Australian parliament. That's a matter for the politicians. Just assuming that there's no major problem in that respect, we would absolutely expect it to go ahead. We have mutual economic interests. China has a continuing need for raw materials, natural resources, and energy. We have a capacity to help supply them with those things. On the other hand, for us, China is obviously a very important market, particularly for energy and resources. It's Australia's largest market by a very long way, but it's also an increasingly important source of foreign investment in Australia, and frankly we want to maintain that investment. A free-trade agreement, which will also give us better access to a whole series of Chinese markets for our agricultural production and in other sectors, makes perfect sense to both of us. It's in our mutual interest. I started off the process, I and a then-trade minister, on the negotiation of a free-trade agreement with China in 2006 and 2007. It’s taken a long time for it to come to fruition for all sorts of reasons. But it has now, and I think it's very welcome.

OR: Australia has, via its export relationships, a clear idea of what's going on in China economically. Do you think this is going to be a sustained slowdown?

Downer: I wouldn't put it that way. Our exports to China are continuing to grow, and China's economy is continuing to grow, so if China's economy continues to grow at the current rate, our exports are going to continue to grow. There has, remember, in terms of commodity prices, been a very big increase in supply. A lot of the increase in supply, in terms of iron ore in particular, has come out of Australia. The increase in supply may reduce prices. The Chinese economy has come off the pace a bit, but it hasn't fallen into recession, and I wouldn't overstate its problems.