Sino Strategies: China's Influence & its Implications for the U.S.

From June 13th to the 20th, Chinese Premier Li Qiang is scheduled to visit Australia, New Zealand, and Malaysia, marking the first time a Chinese premier has visited New Zealand or Australia in seven years and Malaysia in nine years. During his visit to Australia, Premier Li Qiang will participate in high-level meetings, including the ninth China-Australia Annual Leaders’ Meeting and a China-Australia CEO Roundtable Meeting. In New Zealand, Li is set to meet with Governor-General Dame Cindy Kiro and Prime Minister Christopher Luxon, and in Malaysia Li will meet with high-ranking officials, likely including Prime Minister Datuk Seri Anwar Ibrahim. 

Premier Li’s visit is significant not only because of its timeliness but also because of what it could imply for the future of Chinese relations with other countries in the region. The visit also raises questions around how the United States’s Indo Pacific strategy may evolve in the next few years.

China’s Relations with Asia-Pacific Countries

Australia, New Zealand, and Malaysia are three of China’s key trading partners. Indeed, China is Australia’s largest trading partner, with Beijing mainly importing energy and natural resources including iron ore, natural gas, and gold from Canberra. China is also New Zealand’s largest trading partner, and Wellington’s primary exports to Beijing include dairy, meat, and wood products. Additionally, China is Malaysia’s largest trading partner and Malaysia has consistently been China’s largest trading partner in South-east Asia, with Beijing sourcing primarily integrated circuits and other technologies from Kuala Lumpur. 

These countries have also experienced diplomatic tensions with China, especially in the past several years. For Australia, relations with the PRC were stagnant from 2016 until 2022 due especially, among numerous other matters, to concerns about foreign interference and aggressive Chinese cyber intrusions, as well as calls made by then-Prime Minister Scott Morrison to understand the origins of COVID-19. New Zealand and Malaysia, for their part, have previously expressed concerns about rising tensions driven by Beijing in the South China Sea and the Taiwan Strait. The lack of engagement from China’s Premiers in these countries over the past several years likely also suggests fraught bilateral relations between Beijing and Canberra, Wellington, and Kuala Lumpur, respectively. 

Significance of Li Qiang’s Visit

Premier Li’s visits come at a time of geopolitical uncertainty, supply chain vulnerabilities, and shifting regional dynamics for China — not to mention subpar relations with other countries in the region, as noted above. Premier Li’s visits mark a step towards reopening discussions and fostering greater cooperation between China and other countries in the region. Indeed, China has the unenviable task of managing border relations with fourteen countries, as well as what it perceives as competitive behavior from Western countries such as the U.S. Thus, China’s relations with countries such as Australia, New Zealand, and Malaysia could be perceived as national security concerns more than anything else. Given Xi Jinping’s heavy emphasis on national security — and growing interest in playing a role on the international stage — this might be the first of many regional visits for China’s Premier. 

Implications for the U.S.

1. U.S. Policy Implications

As China deepens its engagement with Asia-Pacific countries, the U.S. may have to adjust its foreign policy strategy in the Indo-Pacific. Beijing has been vocally critical of AUKUS, the U.S.’s trilateral security partnership with Australia and the UK, since its announcement, and the terms of the partnership could be jeopardized by reinforced relations between China and Australia. U.S. policymakers might consider expanding membership of the Quad security dialogue to include a country from Southeast Asia, such as Indonesia or Malaysia, to strengthen American positioning in the region. The U.S. might also consider revamping the Indo-Pacific Economic Framework to increase American financial influence and ensure trade remains fair and well-regulated in the region.

2. U.S. Business Implications

Australia, New Zealand, and Malaysia are significant trade partners for the United States. According to the Office of the USTR, the U.S. imported $16.0 billion worth of goods including meat, precious metals and stones, and optical and medical instruments from Australia; $5.4 billion worth of goods including meat, wines, and dairy products from New Zealand; and $54.2 billion worth of goods including electrical and electronic products from Malaysia in 2022. These countries also contribute important services to the U.S. American businesses can only stand to benefit from deepened engagement between the U.S. and these countries, and American businesses could consider expanding their own engagement and operating structure to include supply or value chain partners from these countries. 

3. U.S. Consumer Implications

U.S. consumers would benefit from enhanced relations between the U.S. and the Indo Pacific. As noted directly above, Australia, New Zealand, and Malaysia contribute substantial amounts in goods and services to the United States. As the U.S. deepens engagement with countries in the Indo Pacific, American consumers gain access to a broadened selection of experiences and consumption options.