China Trends #23 - Canada, Japan and Australia: Swing States or Pawns for China?

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By François Godement

In anticipation of the late July EU-China summit in Beijing, held at China’s insistence, there are so far no visible concessions from the Chinese side. Europe should thereafter consider the recent experience of some middle powers in dealing with the People’s Republic of China.

At first glance, there is not much in common between Australia, Canada, Japan and the European Union. Australia and Canada are middle powers by the virtue of their size, and both share the peculiarity of being large energy, raw materials and agricultural exporters to China: 74 percent of Australia’s sales to China, including LNG, 66 percent in Canada’s case. Japan is the largest of the so-called "middle powers", and still has China as a key industrial partner, especially in the automotive industry and consumer electronics.

As for the European Union, which by some counts deserves a seat at the table of the world’s great powers, it mixes some agricultural exports to China-often exploited by the Chinese side in current trade tensions-with a much larger exposure to China’s industrial overcapacity.

In the past two decades, a chain of events has reinforced the perception that a swing was indeed possible to achieve. Chief among them, of course, is the added economic leverage that China now holds over all four, through economic interdependence or outright dependance, as the rare earths issue now shows, and China’s willingness to practice coercion and link trade with security postures. Ironically, the Chinese op-eds do not hesitate to condemn such "economic bullying"-solely when it comes from others.

But skepticism regarding the reliability of the United States has also built up in Australia, Canada, Japan and the European Union. There was the failure of a Trans-Pacific Partnership (TPP) with the United States under President Barack Obama’s watch, a tighter Transatlantic Trade and Investment Partnership (TIPP) which never took off the ground between the United States and Europe; asymmetries between US hard power or willingness to go into conflict and Europe’s uncompleted common defense.

With Asia, the US alliance as a "hub-and-spoke" relationship endured. The term, often attributed to John Foster Dulles in the making of the 1951 San Francisco Treaty, is being given world-wide relevance by Donald Trump: America now prefers bilateral deals to multilateralist interaction. The net result, now compounded by a strong reengagement of Russia by the United States, leads every one of its partners to deeper doubts about the latter’s reliability. Not even the so-called "prioritizers" in the Trump administration can fully reassure some of them.

This, and the vigor and unpredictability of Donald Trump’s trade bargaining since the April 2nd "Liberation Day", naturally leads to examining the case for re-engaging China-or for accepting to be re-engaged. It is, after all, the world’s first trading nation and one that might perhaps concede better terms if it fears an "encirclement" led by the United States.

A look at the diplomacy of Japan, Australia, and Canada shows that reengagement has indeed happened. These three countries all started from a high point in trade and mutual linkages with China, only to go through a protracted period of trade tensions and in some cases acute political and diplomatic crises. Today, without apologizing for downturns that were largely due to China’s own behavior, they seek to normalize the relationship, and perhaps to upgrade it. This is the case of Australia’s recently re-elected Labor government, even if it still endorses its predecessors’ Indo-Pacific strategy, Canada’s Liberal government embroiled in acrimonious debates with the United States, and Japan’s Liberal Democrats clinging to their traditional relationship with Washington but seeking a form of normalization with Beijing.

An exploration of Chinese views on this shift and the relative détente reveals that it is highly conditional on China’s part: The main concession being a fall in aggressive rhetoric, except when the United States or supposed local "hawks" are castigated as the culprits for previously souring relations. That military issues are paramount, whether China’s offensive or defensive positions, is well demonstrated in Australia’s case. 

In other cases, what China rescinds is sanctions it had imposed in the first place, usually, but not always, in retaliation to measures it disliked. The hostage-taking of two Canadians in response to the proceedings against Huawei CFO Meng Wanzhou, the trade sanctions and duties on canola against Canada after it imposed a large tariff on Chinese-made electric vehicles, the tariffs and non-tariff barriers on Australian beef, barley, copper, coal, timber, wine (and lobsters) but not iron ore, which China needed, are as many examples of removable sanctions put in place.

Small countries such as Lithuania and middle powers, starting with South Korea, have been the first on the receiving end of these tactics. These tactics are also meant to have a chilling effect on others. A "normalization of relations" expressed with much fanfare and rhetorical good will from Chinese officials does not include concessions on previous demands from their international partners. Thus, the ban against fish from Japan was lifted-but not for Fukushima and Tokyo although there are no more sanitary reasons. The European Union received a lifting of sanctions on sitting EU Parliament members but not on other personalities or institutions. The diagnosis from relations with Australia, Canada and Japan matches the trend with Europe.

To whom does China hint at a real willingness to negotiate, implying not just words, but actual concessions on both sides? Well, to its nemesis, the United States. In an authoritative albeit anonymous commentary published on July 8, the People’s Daily exhorts Washington to "continue to meet China half-way," which obviously implies China will also walk half of the path to a compromise. You would not find that kind of language with any other nation.

In a nutshell, this gives away Beijing’s strategy toward all but the number one global power: Talk the walk rather than walk the talk. There is now more frankness in acknowledging hyperrealism. Thus, Minister of Foreign Affairs Wang Yi admitted to Kaja Kallas, the EU High Representative for Foreign Affairs and Security Policy, that China cannot accept Russia’s defeat. This follows years of pretended "neutrality" on an issue that Europeans placed on top of their agenda with Beijing. Lambasting Vietnam for accepting US additional duties on reexports from China is also a broad recognition that China uses all available detours in its international trade.

This paradox should not be pushed too far as we are in front of unfolding events: The United States does walk back measures, sometimes very quickly, while China remains more predictable, mostly on the side of rigidity. What this demonstrates is that, seen from Beijing, small or middle nations have no agency, unless they have an irreplaceable asset and no vulnerability to trade or security threats. Very few cases of agency remain, in a world where the United States and China are the first and second economic and military powers-with the ensuing dependencies from their partners. To counter trade fragmentation and, more broadly, the breakdown of international rules, do these other nations have the wherewithal to form coalitions based on shared interests: What Thucydides would have called a Lacedemonian League or, more aptly, an Achaean League? This coalition would have to counter Athens (the United States) when needed, while excluding Sparta or Macedonia (China) in principle. That is a tall order, yet that may be our challenge in the immediate future.

Copyright Image : Asanka Ratnayake / POOL / AFP
The introduction article to this edition of China Trends by François Godement was also published by The Diplomat.

By Michael Kovrig 

Chinese analysts have expressed optimism that Prime Minister Mark Carney’s leadership could open the door to a diplomatic "reset" with Canada. However, according to Michael Kovrig, former diplomat and Executive Director of StrategicEffects, cautious recalibration, rather than a genuine rapprochement, may be a more accurate reflection of reality. While economic interdependence once fostered mutual benefit, it now reveals strategic vulnerabilities. Kovrig further points to a gap between conciliatory rhetoric from Chinese officials and the Party’s actions, which aim to assert dominance and deflect criticism. These tensions are compounded by persistent concerns over cyberattacks, economic coercion, political interference, and human rights violations. 

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By Naoko Eto

While recent diplomatic and economic exchanges suggest a modest thaw in Sino-Japanese relations, Naoko Eto, Head of the China Group at the Institute of Geoeconomics, argues these developments fall short of a genuine rapprochement. Indeed, the perception of Japan among Chinese analysts remains clouded with strategic bias, Japanese diplomacy being often portrayed as instrumental to a broader Western containment of China. In contrast, Japan’s assessment of China is marked by a measured and multifaceted realism, recognizing China’s economic centrality while growing increasingly wary of strategic dependencies and security risks. 

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By Juliette Odolant

Since Albanese’s election, Chinese discourse portrays the Australia reset as an opportunity to deepen economic interdependence-and to delegitimize the US-Australia alliance by rebound. Will it be enough however to recalibrate power dynamics in favor of Beijing? China casts Australia as a potential swing state-tempted by economic pragmatism but tethered to a US-led containment architecture. Juliette Odolant, a graduate in Chinese Studies from the University of Cambridge, explains how Chinese voices instrumentalise the thaw to fracture Western consensus in the Indo-Pacific. Yet, her piece also explores how in a multipolar environment, Australia shows a clear inclination to deepen trade and diplomatic ties with China.

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By Justin Bassi

A distinctive feature of this edition is the inclusion of a paper on Australia-China relations, offering a perspective from Canberra. Australia’s stability cannot come at the price of submission to Beijing. Tariffs on Australian goods may be gone but the pressure of implied threats from China persists. China’s coercive playbook toward Australia has simply evolved. Military intimidation, implicit economic threats, diplomatic manipulation, and technological dominance now form a subtler and potent arsenal. Justin Bassi, Executive Director of the Australian Strategic Policy Institute, reveals how Australia’s policies may have turned a blind eye on China’s coercive strategy. Trade normalization does not equate political détente: How can Australian sovereignty be separated from Beijing’s preferences therefore?

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