SYDNEY/BEIJING, June 30, 2025 — Chinese Ambassador to Australia, Xiao Qian, has called on Canberra to resist “hyping up” a so‑called China threat narrative and refuse to let U.S. pressure dictate its defence budget, in a strongly worded diplomatic intervention published this week ().⸻📣 Ambassador’s Message: Fiscal Prudence over Armament • In an opinion piece for The Australian, Xiao criticized efforts—spurred by U.S. calls and NATO examples—to raise Australia’s defence spending to levels such as 3.5% of GDP or more, warning such moves would impose a “heavy fiscal burden” and undermine social services and economic growth . • He emphasized that China’s own defence budget remains moderate, around 1.5% of GDP, and urged Australia to avoid Cold War‑style bloc confrontation, pursue dialogue instead, and preserve the “friendship” between the two nations .⸻🌏 Strategic Context & Reactions • U.S. concerns: At the Shangri-La Dialogue, U.S. officials called on Australia to significantly ramp up military expenditure in response to China’s growing military posture—prompting Beijing’s outspoken response (). • Australian government stance: Prime Minister Anthony Albanese and Defence Minister Richard Marles have maintained that Australia will determine its defence budget based on national needs, planning a gradual rise to 2.4% of GDP by 2033–34, rather than aligning with fixed quotas urged by the U.S. . • Growing anxiety: Defence Minister Marles has acknowledged that concerns over China’s military and nuclear expansion are contributing to “security anxiety” in Canberra .⸻⚔️ Flashpoints Fueling the Debate • West Australian analysts point to recent Chinese naval exercises—such as warships circling Australia and live-fire drills in the Tasman Sea—as reinforcing the argument for increased defence spending . • Meanwhile, Australia is pursuing major defence projects, including anti-ship missile deployments and new U.S.-built submarines, as part of its AUKUS commitments ().⸻🔍 Balancing Act AheadThis diplomatic exchange sets the stage for a complex balancing act: 1. U.S. Alliances: Washington is pushing Canberra to match China’s military rise with high defence budgets, amid efforts to fortify the Indo-Pacific. 2. Chinese Economic Ties: Beijing is leveraging economic influence, warning Australia of economic risks if it leans too heavily into U.S.-led military blocs. 3. Domestic Considerations: Canberra must weigh fiscal responsibility, public priorities, and strategic imperatives as it prepares for upcoming international summits and avoid being caught in geopolitical tug-of-war.⸻📅 What’s Next? • Diplomatic engagements loom: Foreign Minister Penny Wong is expected to meet U.S. and Quad counterparts shortly, while Prime Minister Albanese gears up for discussions in Washington and an upcoming visit to Beijing . • Budget watch: Australia’s defence spending trajectory will be critical—its success in navigating between an assertive China and a demanding U.S. will shape regional alliances and domestic priorities.⸻In sum, Ambassador Xiao’s intervention highlights Beijing’s pushback against Australia’s alignment with U.S. strategic goals. Canberra now faces strategic choices: escalate defence funding in sync with U.S. allies, prioritise economic and diplomatic ties with China, or find a middle path that secures national interests without deepening regional divides.⸻
