Last week, amid deteriorating Australia–China relations, two Australian reporters flew home from China on the advice of the Department of Foreign Affairs and Trade.

It later emerged that the Australian Security Intelligence Organisation and Australian Federal Police had executed search warrants in June on four Chinese reporters based in Australia. DFAT was concerned that China could take action against the two Australian journalists in response.

As a result of their departure, there are no Australian media correspondents in China for the first time since 1973. It is unclear when the reporters would be permitted to return – or whether they would choose to do so.

Independent news on China is available from a number of foreign sources, but the absence of Australian reporting may add to the growing sense of separation between the two countries.

Apart from a large increase in defence spending, Australia’s main foreign policy strategy for dealing with China’s growing assertiveness has been its efforts to build loose coalitions and new “mini-lateral” relationships with like-minded Asian countries that also face challenges with China.

This is a good policy and Australia should aim to be an embedded participant in this coalition-building process. But its conduct has at times left it on its own – as seen, for example, in its call for a COVID-19 inquiry, which it appeared to undertake without substantial consultation with regional neighbours.

Australia is now one of the few major countries without its own reporters in China. It is starting to look increasingly isolated.

Standing by Indonesia

Jakarta reintroduced tough lockdown rules this week, following a steep rise in Indonesia’s COVID-19 infection rate.

Indonesia has reported 225,030 cases and 8965 deaths. Its total number of cases is the second-highest in South-East Asia, after the Philippines; its death toll is the second-highest in Asia overall, after India. There are concerns that both figures are understated. 

As a close neighbour and valued diplomatic partner, Indonesia is important to Australia and so is its recovery from the pandemic. Two million Australians a year normally visit Bali. And the countries had planned to boost their economic engagement in 2020 with a new trade deal. 

The Australian government is considering how it can provide support to Indonesia as its health care system comes under pressure and its ability to deliver social assistance payments flags.

However, Indonesia may also be vulnerable to a financial crisis if rising infections cause a sharper economic downturn, leading to an outflow of capital and a need for increased government spending.

As the Australian government plans its post-COVID strategy, it should make provisions in October’s budget for a stand-by loan, in case Indonesia’s capital market deteriorates. Australia has done this previously – during the 2009 global financial crisis, for instance.

There are several ways it could finance such a loan, on its own or with other countries, possibly at no cost to the budget. And the mere fact of the loan’s existence could be enough to reassure foreign investors that Indonesia will remain stable.

Japan’s new PM

On Monday, Japan’s ruling Liberal Democratic Party chose Yoshihide Suga to be the country’s new prime minister, replacing Shinzō Abe, who resigned due to ill health after almost eight years in office. The seventy-one-year-old will serve out the remaining year of Abe’s three-year term before facing another leadership election.

Suga, who worked closely with Abe as cabinet secretary and chief government spokesperson, is seen as a safe pair of hands. His lack of international experience also suggests Abe may continue to influence foreign policy behind the scenes. 

However, Suga appears to be a more sure-footed manager of domestic issues and there is speculation he may call an early election to try to secure a personal mandate beyond Abe’s support.

Japan is Australia’s key security ally in Asia and is becoming a more important commercial partner and foreign investor – particularly as the Australia–China relationship sours.

Australia has a significant interest in seeing the stability Abe brought to Japanese domestic and international affairs maintained. But as Suga prepares to assume the role of prime minister, Australia should ready itself for less certain leadership.