US should focus on economic ties to compete with China in Indo Pacific, says former Australia PM

Sydney, Australia - Australia's former Prime Minister Scott Morrison, testifying at a US Congress panel hearing about countering China, has urged the US to "double down" on its economic engagement in the Indo Pacific where Beijing is asserting influence.

Speaking on Wednesday, July 23, Morrison said economic security is the main security focus of many countries in Southeast Asia, and US leadership on economic issues and Western investment gives the region choice.

"When China is active in a particular country... the response to that is not for the US or other allied interests to not be there, the response is to double down and be there even more strongly to provide them with that choice," he said.

Morrison was invited to speak to the Select Committee on the Strategic Competition Between the United States and the Chinese Communist Party about his government's experience of China imposing $20 billion in unofficial trade sanctions after Australia called for an inquiry into the origins of the COVID-19 pandemic in 2020.

The sanctions were lifted by Beijing after Morrison lost a national election in 2022, and Anthony Albanese's Labor government sought to stabilize ties with Australia's largest trading partner.

Morrison said the US should work more with its Quad allies including Australia and Japan to build a supply chain for critical minerals and rare earths needed for defense equipment, including the nuclear-powered submarines Australia is buying from the United States under the AUKUS pact.

"The processed rare earths, whether they go into nuclear submarines, F-35s or whatever it happens to be, that is essential for those things to be done," he said.

Deals similar to that struck this month for the US Department of Defense to back US-based rare earth magnets producer MP MaterialsMP.N "should be extended to allies and partners", he said.

China recently demonstrated its leverage by withholding exports of rare earth magnets, upending global markets, before reversing course.

The Australian public awareness of the potential threat posed by China is "somewhat in jeopardy", Morrison said, pointing to a Lowy Institute poll showing more Australians see China as an economic partner than a security threat.

(Reporting by Kirsty Needham in Sydney; Editing by Raju Gopalakrishnan)