On Taiwan, the status quo remains our best bet

August 27, 2004 IN the long term, Australia will face a fundamental challenge managing relations with China and the US that are equally good. That is the real implication of last week's fracas over Taiwan and the ANZUS treaty. The fact is that China is set to become the predominant power in Asia. It is the only power that could eventually become a peer competitor of the US. This has important implications for Australia. We are the closest US ally in the region and its second most important ally in the world, after Britain. We went to war in Iraq effectively because of the importance of the alliance. As John Howard says, the US guarantees our security in a way that no other country can. But China is becoming of immense economic importance to Australia. It is now our second-largest export market and is set to become our biggest trade partner by the end of this decade. Australia and China now talk about building up a bilateral "strategic partnership". On the surface, that seems primarily to be about providing secure and stable resource and energy supplies for China. But the subterranean agenda may be that Beijing requires Canberra to have more of a realpolitik approach to the changing geopolitical map of Asia, and the inevitable rise of China to power.