Of critical importance is Australia’s capacity to promote closer ties with China while remaining firmly ensconced in a security alliance with the United States and maintaining close security ties with Japan. In a period of tense relations between China and Japan and strategic competition between the United States and China, officials in Canberra require sophisticated diplomatic skills to maintain a balance between alliance and economic interests. Given the rise of China as an economic superpower over the past ten years, the current focus on China by the Australian Government is not new, but the attention that China receives in Australian Government circles and more broadly in Australia represents a significant shift from the comfortable arrangements Australia has enjoyed with the United States (security) and Japan (trade) over the previous forty years.

This project will consider three key questions in the context of the rise of China:

1. What does power transition in the region mean in real terms for Australia-Japan political and security relations? Can security upgrades be sustained and if so, does this suggest a commitment to contain China?
2. What, if any, are the contentious policy issues between Tokyo and Canberra on the rise of China?
3. Australia’s capacity to successfully juggle two competing bilateral relations (Japan and China) is viewed in Canberra as vital to Australia’s long-term economic and political well-being. Is this perception likely to change in the short- to mid-term during a period of close alignment between Prime Ministers Abbott and Abe?

These questions are significant as they consider the historical shift from cold war framework to the new less-certain realities in the contemporary period. The decision by the Australian Government in 2012 to allow a substantial number of US marines to be based in Darwin demonstrates the continuation of Australia’s ‘hard political culture’ and suggests that existing security arrangements with the United States are very much intact. As well, there have been remarkable security upgrades between Japan and Australia since 2007. Nonetheless, the rise of China as an economic superpower represents a significant challenge to current global and regional order. In this context, the issue of the rise of China and its consequence is arguably the most weighty issue in the history of Australia-Japan bilateral consultation. How both countries handle China’s rise will reveal much about national interests in each country and offer a clear method to accurately gauge the impact collaboration and consultation has on policy makers.

This project’s objective is to provide a deeper understanding of how Japanese firms respond to the opportunities and threats from increased globalisation based on micro-level data sets. It will specifically aim to model and conduct an econometric analysis of the employment, wage and productivity effects of globalisation on Japanese firms. This project will also contribute better policy formulation in relation to outward foreign direct investment (FDI) promotion and related labour market issues in Japan.