By Geoff Raby

It has no natural friends and allies, other than a long-standing relationship with Pakistan.

For the moment it has tactically drawn closer to Russia, but all the historical baggage of mutual suspicion and associated mistrust persists between them.

China can’t build its security, as the US has done since President Harry Truman, on alliances of like-minded countries with shared values or perceived common threats. The US combined both during the Cold War, together with mutually assured destruction from nuclear weapons, to produce a stable world order.

After Mao took over in 1949, China sought its security initially in an ideological and anti-western alliance with the then Soviet Union, but this soon shattered in 1961. Russia had historically sought its security through territorial expansion, or by treating allies as dispensable to its security.

Russia’s failure to enter the war on the Korean Peninsula, despite its encouragement, demonstrated again to the Chinese leadership what they already knew from Stalin’s tactics during the revolutionary period in China – the Soviet Union could not be relied on for China’s security, and was more of a threat than an ally. Stalin’s perfidy over Taiwan is still seen by many in China as having lost them the chance to “recover" Taiwan.

After a decade of vulnerability to the Soviet Union and deepening anxiety about its security, Mao dramatically changed course and sought security through opening diplomatic relations with the US.

As a major power, China inevitably will now seek to shape a stable regional order to achieve its security. As Tony Walker observed in these pages last Saturday, China has now entered a new and permanent phase of adopting a much more assertive foreign policy.

Henry Kissinger in his latest book, On World Order, describes the need for major states to balance power and legitimacy to achieve security. Recently, China has proposed the establishment of an Asia Infrastructure Investment Bank. Whatever its commercial and economic merits – and there are many – and its challenges over governance – of which there are also many – it is a serious attempt by China to shape a new regional order.

In this, China is using its power – in this case its immense economic weight in the region – and seeking legitimacy by acting together with other states to influence and share in the management of this power through the creation of a new, rules-based, regional institution.

Rejection of AIIB membership was a mistake

Australia’s decision not take up China’s invitation to become a founding member was a mistake. If there is going to be a stable regional order that accommodates China’s rise, then it will require regional arrangements that reflect the realities of the contemporary world, most notably China’s weight in it.

By contrast, China’s attempts to assert its claims over parts of the South China Sea by appealing to its historical claims to the 9-dash lines, is an attempt to assert power without corresponding legitimacy. It will therefore not add to regional stability and so will undermine China’s own security.

Since China’s more assertive stance on the issue from about 2009, these policies have been counterproductive for China.

A decade of regional diplomacy which saw China’s near-neighbours in ASEAN generally welcome China’s economic ascendency, was soon replaced by anxiety about China’s intentions.

To the extent one of China’s longer-term strategic priorities in the region is to balance US influence in the region, then the nine-dash policy has been a failure. It has driven countries in the region, including some that may have been ambivalent about the US’s role, closer to the US and making something like President Barack Obama ’s pivot almost an inevitability.

We can only speculate that in part this assertiveness was driven from within China’s domestic politics.

It is only becoming apparent, with ongoing political purges of President Xi Jinping ’s opponents under the guise of the “anti-corruption campaign", the extent of the struggle over the succession. It is likely to have been going on for some years before Xi took over.

But whatever the reason, the nine-dash policy has set back China’s quest for a stable regional order. China’s muscle flexing has thus been inimical to its security.

The recent APEC and G20 meetings are interesting in this respect. Within a fortnight, President Xi demonstrated that despite a year-long, seemingly inexorable, shift towards much closer relations with Russia, China showed it could and would work with the US to provide global leadership – in this case on climate change.

China’s reminder to Russia

In Beijing, at the APEC Leaders’ Meeting, only one other leader was more irritated than Tony Abbott over the joint China-US Agreement on Cimate Change, and that was Vladimir Putin.

China reminded Russia that it – unlike Russia – had many strategic options and was capable and willing to exercise them to advance its own interests.

Xi followed this in Australia, with the signing of the China-Australia free trade agreement (Chafta). Other than with Switzerland, this is China’s first FTA with major market economy and has gone well beyond agricultural trade to embrace services, investment and other trade-related rules. This was also done just weeks after Australia rebuffed China’s invitation to become a founding member of the AIIB.

So far as can been understood from public announcements, there doesn’t seem to be a lot of commercial gain in it for China. After all, the Australian economy is virtually completely open after its 20-year reform journey. China did not even seem to achieve one of its principal demands – the introduction of a foreign-investment review threshold for its SOEs at least equivalent to that applying to POEs.

Together with the AIIB, the FTA may be intended to begin the task of resetting China’s regional diplomacy, away from a lopsided emphasis on power, to one which seeks to balance legitimacy with power. Viewed from this perspective, Chafta is part of China’s quest to refashion a stable regional order that advances China’s security. Expect to see more of this in the months and years ahead.

Australia, then, has an important opportunity to work with China to help it achieve security. Respected by senior Chinese policy figures for our initiatives in the region, such as APEC and the Cambodian Peace Settlement, and our acknowledged close relations with the US, we have a solid basis on which to engage with China to find initiatives that contribute to regional stability.

Geoff Raby is Chairman and CEO of Geoff Raby & Associates and a former Australian Ambassador to China.