China unlikely to punish Australia over Japan sub deal

John Kerin, Financial Review, Mar 26
China is unlikely to punish Australia even if it chooses a Japanese submarine for its new $50 billion Collins class replacement project according to one of the nation's leading strategic thinktanks.
In a new paper released by the Australian Strategic Policy Institute which examines "Option J" as it is now known a key Abbott government defence white paper adviser Dr Andrew Davies and analyst Dr Benjamin Schreer argue accusations China will retaliate against Australia buying a Japanese submarine by cutting trade ties are not borne out by Beijing's behaviour.
Chinese and Australian defence analysts such as the Australian National University based Professor Hugh White have argued Beijing will punish Australian trade and strategic interests if Canberra opts for a Japanese submarine - a danger not associated with choosing one from the other bidders Germany or France.
The government has announced a controversial "competitive evaluation process" to assess the 4000 tonne Japanese Soryu class submarine, the German TKMS 4000 tonne Type 216 and the French DCNS non nuclear version of the 5000 tonne Barracuda submarine.
But there has been criticism from Labor, the unions and minor parties that the Japan is a "done deal" and the  ten month process a fig leaf over a decision already made.
Mr Abbott and Japanese Prime Minister Shinzo Abe have pushed the Japan option strongly as part of forging closer strategic and security ties between the two countries. 
While the authors stress they are not endorsing "Option J"  "there's no evidence to suggest closer Australia-Japan strategic ties developed over the past decade have damaged Australia's political and economic ties with China in practical terms".
"While Chinese officials and academics have complained about closer Australia-Japanese security relations, Beijing hasn't threatened to stop or even reduce bilateral trade and military exercises with Australia have continued to widen in scope," the report says.
It notes that while Foreign Minister Julie Bishop and Defence Minister David Johnston were critical of China over its behaviour in North Asian maritime disputes effectively backing Japan in November 2013, less than a year later Beijing rewarded Australia with a trade deal  which "included a better deal on dairy products than China's free trade deal with New Zealand".
The report also notes Australian troops were also involved in their first trilateral military training exercise with Chinese and US troops in Australia's north in 2014.
"Australia can sometimes be a vocal critic of China and not suffer unduly," the paper argues
"Australia's trade relationship with China doesn't constrain our ability to act independently in the security and defence domain, even when our actions conflict with China's strategic preferences," the report says.
From a technical point of view the authors argue the Japanese options is the most risky of the three given Tokyo has never exported a submarine.
"Working on a  commercial basis with a European supplier with experience in exporting submarines and submarine building would probably be less fraught than establishing a robust through life relationship with Japan more or less from scratch".
"[But] it's not right to say that Option J offers little in the way of positives...we think that working with an engaged and capable Japan that's prepared to work with its allies and partners towards a common view of a regional order...underpinned by military cooperation is a net benefit [and] an Australia-Japan submarine deal would make that more likely," it says.
The report also rejects suggestions acquiring submarines for Japan make it any more likely Australia would support its alliance partner the US in going to Japan's aid in the event of a conflict with China.
The report concedes choosing the Japanese option even with some part of the work carried out in Adelaide would mean less jobs than the European options.
The future of government owned Adelaide based ASC and submarine jobs has been a point of contention between the Federal government and Labor, the unions, the South Austrlaian government and minor parties.
"Ultimately the government will have to weigh the industrial implications and project risks of the competing options," the paper argues.
"But Option J isn't the same as the European options...arguments for and against a submarine deal with Japan relate to a much bigger question about Australia's strategic positioning in an evolving Asia-Pacific order," it says.