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Regional Responses to US-China Competition In Regional Responses to U.S.-China Competition in the Indo-Pacific Australia and New Zealand Michael S. Chase, Jennifer D. P. Moroney C O R P O R A T I O N For more information on this publication, visit www.rand.org/t/RR4412z1 For more information on this series, visit www.rand.org/US-PRC-influence Library of Congress Cataloging-in-Publication Data is available for this publication. ISBN: 978-1-9774-0552-4 Published by the RAND Corporation, Santa Monica, Calif. © Copyright 2020 RAND Corporation R® is a registered trademark. Cover: globe: jcrosemann/GettyImages; flags: luzitanija/Adobe Stock Limited Print and Electronic Distribution Rights This document and trademark(s) contained herein are protected by law. This representation of RAND intellectual property is provided for noncommercial use only. Unauthorized posting of this publication online is prohibited. Permission is given to duplicate this document for personal use only, as long as it is unaltered and complete. Permission is required from RAND to reproduce, or reuse in another form, any of its research documents for commercial use. For information on reprint and linking permissions, please visit www.rand.org/pubs/permissions. The RAND Corporation is a research organization that develops solutions to public policy challenges to help make communities throughout the world safer and more secure, healthier and more prosperous. RAND is nonprofit, nonpartisan, and committed to the public interest. RAND’s publications do not necessarily reflect the opinions of its research clients and sponsors. Support RAND Make a tax-deductible charitable contribution at www.rand.org/giving/contribute www.rand.org Preface This report on Australia and New Zealand is part of a project examining the perspectives of U.S. allies and partners in the Indo-Pacific as they formulate and implement their responses to China’s more assertive foreign and security policy and to a more competitive U.S.-China relationship. Australia and New Zealand have expanded their economic ties with China, but there is growing concern in both countries about China’s rising power and influence. Australia sees strengthening its alliance with the United States as critical to navigating an increasingly complicated regional security environment. The erosion of the relative position of the United States vis-à-vis China is also driving Australia to engage more directly in the region, including in the Pacific Islands. For similar reasons, New Zealand is strengthening its security ties with the United States and intensifying its regional outreach (particularly, engagement with its Pacific Island neighbors). This stepped-up engagement in the region on the part of Australia and New Zealand creates opportunities for the United States and, specifically, for the U.S. Department of Defense and the U.S. Air Force to work with the two countries, and with other regional partners, in new and innovative ways, both operationally and using soft-power tools and approaches. The other reports in this series are available at www.rand.org/US-PRC-influence. The research reported here was sponsored by Brig Gen Michael P. Winkler (PACAF/A5/8) and conducted within the Strategy and Doctrine Program of RAND Project AIR FORCE as part of a fiscal year 2019 project titled “Regional Responses to U.S.-China Competition in the Indo- Pacific” that assists the Air Force in evaluating U.S. and Chinese influence and assessing possible Air Force, joint force, and U.S. government options. Research was completed in October 2019. RAND Project AIR FORCE acknowledges that human subject protections (HSP) protocols have been used in the project that produced this report, in accordance with the appropriate statutes and Department of Defense regulations governing HSP. Information provided by subject-matter experts who are rendered anonymous by HSP protocols is solely their own views and does not represent the official policy or position of the Department of the Air Force, the Department of Defense, or the U.S. government. RAND Project AIR FORCE RAND Project AIR FORCE (PAF), a division of the RAND Corporation, is the Department of the Air Force’s (DAF’s) federally funded research and development center for studies and analyses. PAF provides the DAF with independent analyses of policy alternatives affecting the development, employment, combat readiness, and support of current and future air, space, and cyber forces. Research is conducted in four programs: Strategy and Doctrine, Force iii Modernization and Employment; Manpower, Personnel, and Training; and Resource Management. The research reported here was prepared under contract FA7014-16-D-1000. Additional information about PAF is available on our website: www.rand.org/paf/ This report documents work originally shared with the Department of the Air Force on September 26, 2019. The draft report, issued on December 20, 2019, was reviewed by formal peer reviewers and DAF subject-matter experts. iv Contents Preface ............................................................................................................................................ iii Figures........................................................................................................................................... vii Tables ........................................................................................................................................... viii Summary ........................................................................................................................................ ix Acknowledgments ......................................................................................................................... xii Abbreviations ............................................................................................................................... xiii 1. Introduction ................................................................................................................................. 1 Applying the Project Framework to Australia and New Zealand ............................................................ 1 Organization of This Report ..................................................................................................................... 7 2. Australia’s and New Zealand’s Diplomatic and Political Relationships .................................... 9 Strengthening Relations with the United States ....................................................................................... 9 Managing Growing Friction in Relations with China ............................................................................ 13 Regional Outlooks Shifting Along with Growing Chinese Power and Influence .................................. 18 Intensifying U.S.-China Competition Presents Serious Challenges ....................................................... 20 Expanding Engagement with Other Countries in the Region ................................................................. 24 Australia Steps Up in the Pacific Islands ................................................................................................ 27 New Zealand Bolsters Its Position in the Pacific Islands ....................................................................... 30 Politics and Public Opinion in Australia and New Zealand ................................................................... 32 3. Australia’s and New Zealand’s Economic Relationships ......................................................... 36 China’s Growing Importance as a Trade Partner and Export Destination ............................................. 36 The United States and Its Allies Are Leading Sources of Foreign Direct Investment ........................... 38 China’s Other Potential Economic Levers: Tourism and Students ........................................................ 39 4. Australia’s and New Zealand’s Defense Relationships ............................................................ 41 Strengthening the U.S.-Australia Alliance ............................................................................................. 41 Strengthening U.S.–New Zealand Security Ties .................................................................................... 46 Australia’s Defense Relations with China .............................................................................................. 48 New Zealand’s Defense Ties with China ............................................................................................... 49 Enhancing Australia’s Indo-Pacific Defense and Security Ties ............................................................. 50 New Zealand Is Building Regional Defense Ties .................................................................................. 58 5. Assessment and Outlook ........................................................................................................... 59 Outlook for Regional Position and Partnerships Appears Strong .......................................................... 59 Outlook for Diplomatic Relations Appears Strong Overall ................................................................... 60 Outlook for Domestic Factors Presents a Mixed Picture ....................................................................... 61 Outlook for Economic Relations Reflects Growing Chinese Influence ................................................. 63 Outlook for Defense Relationships Appears Very Strong .....................................................................
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