Australia's new U.S.-UK security pact risks China trade

Reuters reports that Australia's new security pact with the US and the UK, seen as a move to contain China, may worsen strained ties with its biggest export customer, but China's insatiable appetite for resources may limit its punitive responses, say analysts.

The security pact with the Western powers will be seen by Beijing, which is embroiled in a long-running trade spat with Canberra, as a threat, said Michael Sullivan, International Relations Lecturer at Flinders University.

"China will view the decision to expand defence cooperation with the US and UK and, in the future, base US strategic strike capabilities in Australia as confirmation that we are a growing military threat to its interests, such as the Belt and Road Initiative," said Sullivan.

China has in recent years imposed hefty tariffs and restrictions on Australian exports including wine, beef and barley, and outright banned coal imports to express its displeasure over Canberra's foreign policies, though with only limited success so far.

Another point of pressure on Australia had been Beijing's control over Chinese tourists and students that used to spend time and money in the country.

The pandemic has put paid to that for now by effectively closing Australia's international borders, though the local tourism and education sectors are pushing hard for a re-opening by the end of this year.