With Republicans now ahead in the election race, there’s a growing expectation that the US could become a lot more aggressive when it comes to China.
Australian Financial Review | October 28, 2022
Over the past few months, Australians were 20 times more interested in the world’s richest person Elon Musk than in the US midterm elections, according to Google Trends.
But when the results of the November 8 midterms are declared, including 34 Senate seats and all 435 House seats, interest from Australians in the elections will rocket to about four times that of Musk, search data is expected to show.
That’s because Australians know that whoever takes control of Congress has significant sway over US legislation – which can affect everything from the global shipping lanes of the Taiwan Strait, the rare earths deposits of the Australian outback, to superannuation investments.
A Republican victory in the midterm elections will likely deliver tougher action on China, greater support for fossil fuel and critical mineral development, and a shift in the way the US views privatisation, according to two former US congressmen – Democrat Bart Gordon and Republican Jeff Denham. After a collective 36 years in government, they are now senior employees at Washington-based law firm K&L Gates.
So far, more than $US1.3 billion ($2 billion) has already been spent on election campaigns and, as the polls stand, the Republicans may now defeat the Democrats in the House and the Senate.
A new balance of power in Congress is likely to deliver plenty of domestic changes, ranging from renewed support for Donald Trump to the handling of immigration. But the areas that will really matter for Australians if Republicans do take control will be China, energy independence and privatisation.
China is top draw issue
Denham says the new House and Senate members will be more hawkish on China. “While President Biden needs to be more diplomatic with China, I think a lot of new members coming into Congress will be less diplomatic when it comes to China,” he says. “There will be a lot of Republican members that are very, very vocal on making sure that we’re growing our economy, with fewer imports from China.”
“That means making sure that we’ve got our own computer chips that we’re going to need for our manufacturing growth, and that means making sure we are addressing rare minerals. We are going to be looking outside the US for rare minerals that we’ll need for many of our different manufacturing products and that means Australia will play a bigger role. The US will invest in Australia’s critical minerals under a Republican congress.”
US Commerce Secretary Gina Raimondo committed this year to help finance Australian critical minerals projects through America’s export financing arms, while Australian-backed companies were among the winners of $US2.8 billion ($4.5 billion) in grants from the Department of Energy.
Gordon thinks potential increased Republican power will be met co-operatively by Biden on China issues. “That partnership will certainly work together in trying to reduce or stop some of the Chinese aggression.”
Two former Australian ambassadors to the US, Joe Hockey and Kim Beazley, agree on the importance of the midterms for Australians. For Bondi Partners’ Joe Hockey and former Australian defence minister Kim Beazley, a Republican-controlled Congress will mean Australians should get ready for more China challenges.
“One thing we will see is the unification and increased agitation around China between Democrats and Republicans,” Hockey says. “It’ll be one of the few things that will get unity across the aisles, particularly if Xi Jinping becomes more aggressive on Taiwan, or becomes more aggressive in manipulating the reliability of the supply chain from China to America on critical goods,” Hockey says.
“In my view, Congress is much more forward-leaning over Taiwan than the president or the administration. This all means that legislation around AUKUS will be wrapped up in the growing agitation about the United States’ exposure to China’s supply chain, and the risks associated with the Indo-Pacific.”
The centrepiece of AUKUS, which is the transfer of nuclear submarine technology, still requires support from Congress. The US has to provide exemptions on export controls and intellectual property transfers on the sensitive technology, as well as balance language around nuclear non-proliferation sensitivities and exemptions under the International Traffic in Arms Regulations. Republicans are likely to hasten support for this.
For Beazley, the political disruption Republicans could cause for Biden could impede progress on important military matters involving Australia.
“In security terms we have not been so reliant on the Americans since World War II, so we have a direct interest in American political effectiveness,” Beazley says. “The Republican mood seems to be to optimise trouble for Biden. Particularly this will be a problem as Biden approaches funding issues. The Republicans are unlikely to be disruptive where this affects competition with China; but where Biden pursues subtle policy here, they will not.”
More insights like this.
Trump’s return and other Midterm races to watch with popcorn
These Midterm elections are the entree to the next US Presidential election, but the main meal won't be served for…
Candidate quality blamed for ‘red trickle’ in US mid term elections
AUDIO: Candidate quality blamed for 'red trickle' in US mid term elections Australian Broadcasting Corporation | November 9, 2022 Votes…