AUKUS: The Cost of Nuclear Supply
Aimée Look, External Affairs
January 6, 2022
A scuppered submarine deal between France and Australia on September 15, 2021, initially appeared to be an ordinary announcement: Australia had loosened ties with French diesel-powered submarines to receive submarines from the UK and US instead.
But there’s a twist: the US and UK-funded submarines are nuclear-powered.
The geopolitical underpinning rapidly entered discourse following that initial announcement and sent shockwaves through the global diplomatic community. AUKUS took the stage as a Western nuclear alliance, indicating an attempt to suppress China’s growing economic and political power and threatening to add fuel to the historical narrative of China’s suppression by the West.
Will China learn from its past mistakes, and remodel its diplomatic relations with the West for the better? Or is there the potential for a trade deal involving nuclear supply to be devastating in the face of rising tensions- and impact us all?
The Observer’s External Affairs Branch brings you an interview with Professor Nailin Bu of Queen’s University’s Smith School of Business, who has done immense research in the field of International Business in the Asia-Pacific region, teaches courses on Introduction to International Business and Doing Business in the Asia-Pacific Region at the Smith School of Business.
The interview focuses on the tumultuous political and economic history of China’s trade policy, and if we can anticipate China’s response to AUKUS.
How will AUKUS rattle China’s dominant presence in the South China seas, if at all?
It is interesting that you phrase it as China's dominance, but I would phrase it as more of an upper hand. First, let’s understand why China seems to be getting the upper hand in the South China sea. I think that the reason is not China’s raw military power, because China’s annual military spending is only around one-third of that of the United States.
What primarily gives China the edge is that the South China Sea is in its “neighbourhood”, making it easier for China to project its power. Secondly, China has been using very unconventional forms of power, such as deploying armed fishing vessels in the South China seas and occupying unmanned islands.
I think that this is what Westerners call China’s maritime militia. They are armed boats, yet still fishing vessels. This is very hard to manage for the US: What can large military vessels do to interfere with small fishing vessels?
AUKUS is giving Australia a way to build nuclear-powered submarines, which will take several years. It will add to the US military dominance in terms of its number of vessels, as Australia is now a US ally. It does not alter what gives China the upper hand position – its geographical proximity and its deployment of a “maritime militia” fleet of fishing vessels.
At the same time, AUKUS does, however, carry substantial costs. So far, the Chinese stance on nuclear arsenals is that it will keep only enough nuclear arsenal to ensure that it can deter nuclear attacks. The rule of engagement is that it will only use nuclear weapons if it is under a nuclear attack. The move of Australia to have nuclear-powered submarines, itself, is not a threat, but those nuclear-powered submarines contain fuels that have levels of uranium that can be easily used to build nuclear bombs. From a Chinese perspective, this allows Australia to become a nuclear power. This may encourage China to build up its nuclear arsenal and change its rule of engagement with respect to nuclear weapons.
The world has been doing a respectable job in gradually achieving nuclear disarmament, particularly between Russia and the US. Russia, the US, France, and China are leading nuclear powers who have been constantly discussing how to achieve nuclear disarmament, but AUKUS has the potential to dissipate these agreements.
How would you describe China’s stance on AUKUS in terms of how it may impact the country’s economic standing?
I would say that AUKUS doesn’t directly impact its economy per se, but I think that it could have an indirect impact in several ways. I think it could negatively impact China’s economy if it tries to engage in an arms race with the US.
During Mao’s era in China (1949-1976), China’s military spending was over 5% of GDP, and when Mao died, around 85% of the Chinese population lived under the abject poverty line of a dollar a day. If China would increase military spending to the Mao-era level and engage in an arms race, it would certainly negatively affect its economy.
I hope that the Chinese leadership will learn the lessons of the old Soviet Union, which engaged in an arms race with the West and destroyed its economy in the process. I hope that the wiser heads will prevail in China, as it does not make very much sense to do so.
At the same time, I see positive signs in the sense that AUKUS might allow the Chinese government to see its recent diplomatic failures. The country has not made very many friends.
Right after the AUKUS deal was announced, China made a major push to implement RCEP (Regional Comprehensive Economic Partnership) as soon as possible. RCEP is a China-led trade agreement signed last year by 15 Asia-Pacific countries, including Australia interestingly. China also announced its intention to apply to join the CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership). This trade pact was initially led by the US with the aim to constrain China’s economic power in this region. However, the first thing that Trump did in office was to withdraw the US from CPTPP.
Recently, China has also made gestures aiming to improve its relationship with Europe. If AUKUS has caused China to become more conscious about its behaviour in its international relations, then it might be doing some good to the Chinese economy to be more connected to the rest of the world. I’m hoping for this outcome, but I don’t know which effect of the AUKUS deal will be more dominant for China.
How has China reacted to potentially unfavourable Western alliances in the past, and do you anticipate that they will respond in a similar way to AUKUS?
The negative impact of a Western alliance against it is only too familiar to China. China fought the opium war, where the British tried to export opium to China to ease a trade deficit with China.
Britain used its Indian colony to plant and export opium to China, which was quite addictive. The Chinese emperor wanted to ban opium import to China, which ignited a war against the British. The outcome of this war was unfavourable for China, and it lost badly, as China had not industrialized and could not compete with the firepower of the West.
China had to compensate for starting the war and was forced to cede Hong Kong to the British. China was also forced to open treaty ports, including my hometown of Shanghai, to Western powers. As part of the treaty, Shanghai was carved up by western nations, including the British, American, and French, into many western concessions
Each concession became a pseudo-western territory in Shanghai, where the western laws applied in Chinese territory. Today, one area of Shanghai looks like London, and another district has fantastic French pastries. The legacy of colonial influence is still prevalent.
It was a painful memory for the Chinese people. This idea that China was a victim of western aggression was taught in Chinese schools and became a dominant narrative of history for the Chinese people.
It served as a form of legitimacy for the current Chinese government; that in the 19th century China was weak, which is why it was humiliated by the West. Now, China, led by the Communist Party, is building a strong economy and a strong nation so that it does not have to kowtow to the West anymore. This serves as a galvanizing force for the Chinese people as well as legitimization for the current Chinese government. Whether we like it or not, the Chinese Communist government delivered economically for the Chinese people.
The AUKUS deal is almost a signal to the Chinese people “here we go again,” this idea that the Western countries are trying to bring China to its knees again is what the Chinese narrative teaches. So, in this sense, I worry that it is no longer about economic competition and trade war. Economic transactions have compromises – There are always opportunities for giving and taking on both sides.
With the AUKUS deal, it might signal the beginning of a period where both sides believe they are no longer just engaged in a fierce economic competition. Instead, it is now a life-and-death struggle against an enemy. If that is the case, I would say it is truly dangerous, because, in the struggle against an enemy there is no compromise. If this is how the relationship is framed, it is quite scary.
The rhetoric that I currently hear in the West worries me a great deal as well. I am aware that the Asia-Pacific region is always fraught with territorial disputes, but I never thought a real war would happen. But right now, for the first time in my life, I worry about a nuclear war in the Asia-Pacific region. If there is a nuclear war, we in Canada will all be part of it, like it or not.
I don’t think that China will react gently if it gets the sense that it’s a Western alliance against it, due to its painful 19th-century memory. If the US were to think that AUKUS would scare China into submission, it is mistaken.
Even though China is a weaker nation in terms of raw military power compared to the US, China won’t just pack up. In an actual war, we don’t know who will prevail as superior military power does not necessarily guarantee victory.
Professor Bu’s articulation of the historical and political influences of China’s current-day strategy reveals the repercussions of the AUKUS deal and China’s response. She highlighted the positive impacts that the deal may have on China’s awareness of their trade relationships, but also the potentially dangerous implications of tensions amidst countries with nuclear supply. Many thanks to her for giving such an all-encompassing, accessible, and detailed reflection on AUKUS.