The Covid-19 crisis has exposed serious international fault lines and inflamed tensions between China and the United States. It has also revealed the vulnerability of Australia and other middle powers to the fragility of global supply chains.

In Australia, Covid-19 will have a profound impact on our relationship with China—now at its lowest point in years. The pandemic is forcing us to confront the reality that Australia must build sovereign capability across a range of sectors and industries.

It’s impossible to say what the world will look like after the pandemic passes. Indeed, we may have to learn to live with Covid-19 for years ^[1]. But what’s certain is that things won’t be ‘snapping back’ to how they were.

That’s not only because the pandemic has created new circumstances to adapt to, but because it has amplified and accelerated a number of trends that were already underway before the disease first emerged in Wuhan late last year.

These trends include a swing towards protectionism and away from the view that globalisation ^[2] is necessarily a positive thing, the stepping away from global leadership roles by the US under Donald Trump’s presidency and an increasingly assertive and sometimes aggressive China under Xi Jinping.

All of these things are related. While they haven’t sped up at the same rate, they have all intensified.

Tensions between the US and China have been heightened by perceptions in Washington that Beijing covered up details of, or even engineered ^[3], the virus that has now hit the US worse than any other country.

China, for its part, appears to see the US response as that of a superpower seeking to blame someone else for its own deficiencies, something that highlights Beijing’s perceptions of Western democracies as weak ^[4].

This narrative, and the apparently successful attempt to stop Covid-19 running rampant across China after the initial Wuhan outbreak, also fits what the Chinese Communist Party tells its citizens—that it is the best option for ensuring their security and economic wellbeing.

China’s recent actions in the South ^[5] and East ^[6] China Seas, as well as the expansion of its military base in Djibouti ^[7], show Xi has not shelved his geopolitical ambitions either.

That, combined with the Trump administration’s increasingly hard line on Beijing—which has been attributed ^[8] at least in part to the president wanting to paint Democrat Joe Biden as ‘soft’ on China ahead of the election in November—means the prospect of a conflagration cannot be dismissed.

So what does this mean for Australia? In just the past few weeks we’ve seen a worsening of already frosty relations with China to what the Global Times ^[9] described as the ‘worst moment in bilateral ties in the last two decades’.

The state media outlet neatly summed up why relations have sunk to such a level: ‘This latest spat started with Australia’s proposal for an independent global inquiry on the origins and spread of COVID-19. This week, China suspended imports from major Australian beef suppliers.’

The suspension came after warnings of a ‘consumer boycott ^[10]’ by China’s ambassador to Australia and at the same time as threats of a tariff ^[11] of 80% on Australian barley exports to China.

Beijing maintains that these measures aren’t connected to Australia’s push for an investigation into the origins of the coronavirus. China’s opposition ^[12] to calls for an inquiry (though this stance has softened ^[13]), refusal ^[14] to allow World Health Organization investigators into the country and reported demands ^[15] for praise of its international response to the virus have helped lay bare the nature of the CCP and its increasingly coercive tactics.

A European Union motion to be put to the World Health Assembly this week was originally only set to call for a ‘plan for an evaluation’ of the response to Covid-19 and will instead now propose ^[16] an independent, international review of the sort Australia has been calling for. So far, 116 countries have signed up ^[17].

International cooperation of this sort is exactly what Australia and other middle powers should strive for in the face of what are likely to be continued—and escalating—attempts from China to use its economic clout to silence criticism.

Some business leaders and politicians will continue to call for governments to ‘fix’ relations with China, an approach that ASPI’s Peter Jennings has described as ^[18] ‘just shut up and take [the] money’.

But silence, and the tacit acquiescence that comes with it, has economic costs as well as moral and national security ones, and those costs only go up whenever we fail to stand up for our interests.

Rolling over on threats now will only result in increased trade dependence in future, and hand more sway to Beijing next time it has an issue with policies adopted in Australia’s national interest.

That’s why it’s important, as Trade Minister Simon Birmingham said yesterday ^[19], for businesses to consider their risk profiles and for the government to encourage the diversification of Australian trade and ensure the resilience of supply chains.

We won’t stop trading with China in a post-pandemic world. It will probably still help drive Australia’s and the world’s economic recovery. Reducing our dependence, though, means that there will be less risk to our economy in future disputes.

This crisis has helped create a more dangerous and fractious world, but it has also given us the chance to remake our economy and relations with other countries. Australia should take that opportunity and run with it.