China is a threat but talks must continue: Germany, Canada, Australia

SINGAPORE — China’s growing dominance and power may be a concern for countries around the world, but one thing’s for certain: talks must continue.

That’s according to defense chiefs from Australia, Canada and Germany who spoke to CNBC on the sidelines of the Shangri-La Dialogue security summit in Singapore this weekend.

Decoupling from China is not an option, but finding a path to de-risk and reduce dependencies is important, Germany’s Defense Minister Boris Pistorius told CNBC’s Sri Jegarajah at the event.

“It’s not a solution to decouple. It is not a solution to build new walls and build new barricades. We have to find a way of coexistence which means not getting too dependent on anybody. And on the way not to refuse dialogue and cooperation,” Pistorius said. 

China has been Germany’s most important trading partner over the last decade, with 298 billion euros ($320 billion) worth of goods being traded between the two countries during 2022, data from Germany’s statistics office shows. That’s a 21% increase from the year before.

“We have to be more resilient regarding the future in economic and ecological issues too. This is our challenge now at the moment for the next couple of years … It is a joint challenge that we have to solve,” Pistorius added. 

Similarly, China is Australia’s largest trading partner, but the relationship between the two remains “complex” as China continues to build up its military presence in the region, Richard Marles, Australia’s deputy prime minister and its minster of defense, told CNBC. 

“We have a lot of anxieties about China,” he acknowledged.

He emphasized the importance of formal defense dialogues with China to prevent misunderstandings and gather a clear sense of what each country’s strategic intent is. 

“China is engaging in a very significant military build-up, really the biggest conventional military build-up that we’ve seen by any country since the end of the Second World War, that isn’t happening with a sense of strategic reassurance being provided to its neighbors and to the world,” Marles said. “That does form part of our sense of anxiety in a security sense with China. But all the more reason for talks.” 

Trade relations between the two countries soured in 2020 after Canberra called for an inquiry into China’s handling of the Covid-19 pandemic. Beijing subsequently slapped duties and restrictions on Australian imports including barley, wine and coal, among other key products.

There was some reprieve in April when the two sides agreed to temporarily suspend a complaint by the World Trade Organization against China for imposing 80.5% duties on Australian barley. Australia’s Trade Minister Don Farrell told CNBC in April that he’s hopeful other tariffs put in place could be removed as well. 

China is an “increasingly disruptive power” to peace in the region, Anita Anand, Canada’s defense minister said, told CNBC. “We have seen increasing disruption by China in our institutions relating to democracy in our skies and in our seas,” Anand said.

“You’ll remember the balloons for example, you know that we’ve retrieved buoys from our northern waters and in particular, we’ll make sure that Canada’s democracy is safe, and Canada’s skies and seas are safe,” she said stressing the importance of her country’s defense investments. 

A spokesperson from the Chinese ministry of foreign affairs in Singapore was not immediately available for comment when contacted by CNBC. In a statement Friday to CNBC, Beijing’s ministry of foreign affairs said that China “adheres to a national defense policy based on the principle of self defense.”

In February, U.S. fighter jets shot down at least four high-altitude objects in the airspace above the U.S. and Canada. U.S. Secretary of State Antony Blinken described the high-altitude unmanned vessels as “Chinese spy balloons,” and claimed that “more than 40 countries have had these balloons go over their territory.” Beijing denies the balloons were for spying purposes.

Just this weekend, a Chinese warship came within 150 yards of a U.S. destroyer in the Taiwan Strait, according to the U.S. Indo-Pacific Command. The Taiwan Strait separates China from Taiwan, a self-ruled island which Beijing claims as part of its territory.

In late May, the U.S. accused a Chinese J-16 fighter jet of making an “unnecessarily aggressive maneuver” while intercepting a U.S. military reconnaissance aircraft in international airspace over the South China Sea.

“We need to work together as partners and allies to maintain a free and open Indo-Pacific recognizing that China has become an increasingly disruptive global power,” Anand added. “Open lines of communication are important at the same time there are actions taken by China that we need to look at with our eyes wide open.”

There were plenty of discussions about China’s relationship with Taiwan during the Shangri-La Dialogue. 

Speaking at the event Sunday, China’s defense minister addressed the issue.

“Our position on this question is clear. No matter which perspective you take, when analyzing this question, one fact is clear, Taiwan, is an inalienable part of China,” Li told delegates at the summit.

“The Chinese government and the Chinese military will never tolerate any resistance that could lead to a divided China. And at present, in particular, we will not tolerate attempts by Taiwan independence separatist forces, and external forces to separate Taiwan from China.”

Australia’s defense minister told CNBC: “Our position on Taiwan is very clear. We don’t want to see any alteration to the status quo across the Taiwan Straits … that’s the position that we’ve been articulating.”

“We don’t think that conflict within the region is inevitable … We need to create pathways for peace and that’s what we will do,” Marles added. 

Pistorius, Germany’s defense minister, added: “We still keep with our opinion and policy of ‘One China’ and that means at the same time, any change of the status quo is only acceptable if every party is agreeing with, and of course, [is] peaceful. So this is the line we are following — and we will follow in the future.”

Relations between Beijing and Washington hit a new low when U.S. House Speaker Nancy Pelosi, visited Taiwan in August despite China’s warnings to the U.S. to honor its commitment to the “One China” principle.