Pacific pivot to China?

Australia is the most economically integrated with China of all G20 economies. China, has, over the last decade, become Australia's largest trading partner, its leading source of new foreign direct investment, migrants, tourists and international students. For China, Australia is a strategic partner, its sixth biggest trading partner, a major source of minerals, energy, food and other inputs for its ongoing growth. The complementarities between the two economies make for a very strong partnership.

Businesses know this and are getting on with the practical work of building relationships. A million Chinese have made Australia their home. Visitors move between the countries at an ever-increasing rate. But hearts and minds in Australia haven't all caught up with the change. The relationship remains fragile and based on superficial stereotypes, rather than a deep understanding and commitment. Many Australians remain more familiar and comfortable with an Anglo-American world and with Australia playing a junior, colonial role, a follower of global power rather than a regional partner.

The Australian Government has recently announced it will develop a new foreign policy White Paper. It has a Prime Minister who says "there has never been a better time to be an Australian." Might a new optimism and confidence about Australia's assets and its place in the world help reassure Australia that it can embrace the change in the world and its growing links with China and the region? Or will any new strategy be constrained by Australia's habit of playing loyal deputy to its traditional global allies and lingering suspicions of Asia?

The crux of Australia's dilemma is whether it can have both a deep economic engagement with China and the region (and a deepening people to people relationship) while maintaining its security alliance with the United States. If it can have both, Australians will be satisfied that the future is bright; if it cannot Australians will become more and more anxious. I believe it can, if Australia is brave enough to put its national interest first and craft an approach to the world that is at once more confident and less colonial, more multidimensional and less vertical. It is possible the election of Donald Trump will hasten the change.

It turns out the Australian White Paper will be very timely.

• Will Australia cast off its colonial thinking and define its interests independently, first and foremost as national interests, pursued through regional and global partnerships?
• If so, can it have a US alliance and a deep and broad partnership with China simultaneously?
• If the US abandons the Trans-Pacific Partnership, will Australia embrace China's alternative, the Regional Comprehensive Economic Partnership?
• Will Australia seek to join the Association of South East Asian Nations and renew a deeper commitment to the Pacific Islands Forum, embracing its own region?

The region as a whole has similar challenges, opportunities and related questions.

Trade between the Pacific Islands and China doubled last year, tourism grew rapidly from a low base and Chinese investors continued to actively explore the region for opportunities. This is consistent with a trend that is linking the economies of the Pacific Islands with China.

Chinese companies are actively engaged in the energy and resources of Papua New Guinea, in the tourism resorts of Fiji and in the vast fisheries across the South Pacific. But the small, developing economies of the Pacific continue to rely largely on traditional great and powerful friends.

This of course is not uncontroversial. Those large, traditional friends of the Pacific carry baggage, as former colonial powers. While they remain significant development aid donors, some of them have appeared reluctant to support the Pacific against the great climate change threat. Some of the leaders in the Pacific are actively "looking North" to cultivate stronger China links, to effect their own rebalance in the Pacific.

There have been Chinese communities in the Pacific Islands for many generations, often managing the retail sector, restaurants and other small businesses. Today, there are many new visitors from China exploring business.

Chinese finance, Chinese business and infrastructure and supply chain links to China can help the Pacific Islands develop faster in the coming years.