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Australia: US Asia adviser Kurt Campbell says Beijing likely to end trade war on Australia's terms

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US President Joe Biden's top Asia adviser says that China's campaign of economic punishment against Australia has failed and has predicted that Beijing will re-engage with the federal government on Australia's terms.

White House Indo-Pacific adviser Kurt Campbell has told the Lowy Institute that Beijing's coordinated sanctions on a range of Australian products – including coal, barley, wine, timber and lobsters – was designed to bring Australia "to its knees".

"I fully believe that over time, that China will re-engage with Australia. But it will, I believe, re-engage on Australian terms," he said.

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"I think China's preference would have been to break Australia. To drive Australia to its knees … I don't believe that's going to be the way it's going to play out.

"I believe that China will engage because it is in its own interest to have a good relationship with Australia."

While China's tariffs and informal trade barriers have been very damaging for some Australian industries – particularly wine and lobster exporters – a large majority of the goods effectively blocked from China have been redirected to other markets.

Mr Campbell said that China respected "strength" and that Australia's resolve in the face of the economic sanctions would strengthen its hand when dealing with the Chinese government.

He also said that Mr Biden "briefly" raised China's economic coercion of Australia when he met with Chinese President Xi Jinping last month, suggesting it was on a list of "concerning" Chinese activities reeled off by the US President.

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"President Biden was very clear and animated about what we had seen in Australia, [the] border [conflict] with India, all the things that I've mentioned, and just basically said 'we were concerned,'" he told the Lowy Institute.

"We're concerned by some of these steps and what it signals with respect to China."

AUKUS fuelling sense of 'excitement' among allies

Mr Campbell fielded a several questions about the AUKUS technology pact between the United States, Australia and the United Kingdom.

While the main initiative being pursued under the pact is Australia's drive to build eight nuclear-powered submarines using US and UK technology, the framework is also being used to foster broader cooperation on a range of other defence technologies.

Mr Campbell said there was a sense of "excitement" about that broader cooperation program and said "several" US allies had asked if they could collaborate under the framework, although he did not name individual countries.

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"Many close allies have come to us, in the immediate aftermath and said, 'Can we participate?' 'Can we engage?'" he said.

"And it is to the credit of Australia and Great Britain, that they insisted, yes, this is not a closed architecture. It's an open architecture. We want to work with partners in these key areas of military innovation as we go forward."

Some Australian analysts have raised concerns that the drive to develop nuclear submarines with the United Kingdom and the United States will undermine Australian sovereignty because future governments will remain dependent on US technology and expertise in order to operate the new boats.

Mr Campbell insisted that Australian sovereignty would not be "lost" but said there would be more "strategic intimacy" between the United States, Australia and the United Kingdom under AUKUS as the three militaries boosted cooperation.

"I think what I'm suggesting is that Australian sailors will have the opportunity to serve on American vessels and vice versa," he said.

"I think you can expect American submarines to port more commonly in Australian ports. I think we're going to operate and share perspectives much more than we've done in the past."

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Taiwan debate a 'very delicate matter'

He also refused to be drawn into the furious domestic political debate over Taiwan.

Last month, Defence Minister Peter Dutton was slammed by Labor after he said it was "inconceivable" that Australia wouldn't join the United States if there was a conflict over Taiwan.

Shadow Foreign Minister Penny Wong accused while Mr Dutton of stoking tensions with China for political gain and undermining America's policy of strategic ambiguity – where it declines to say exactly how it would respond to a Chinese invasion of the self-ruled island.

Mr Dutton responded by accusing Labor of "crab walking away from the Australia-US alliance".

But Mr Campbell simply reiterated the existing US policy on Taiwan "has not changed" and that the Biden administration was still working to ensure Taiwan had "the appropriate defensive articles to be able to deter aggression".

"I do just want to underscore that this is a very delicate matter. We understand the delicate role it plays in US-China relations," he told the Lowy Institute.

"But we also believe that if the United States is purposeful, is determined, and is clear in its messaging, that we can maintain peace and stability and to secure the status quo in the future."

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