This blog post was first published by the Australian Strategic Policy Institute's The Strategist analysis and commentary site.

The Quad is stronger than ever. The informal ‘minilateral’ grouping of Australia, India, Japan and the United States has in the past year held its first stand-alone ministerial meeting and its first leaders’ summit, and launched an ambitious project to deliver Covid-19 vaccines. This ‘golden age’ of the Quad is a product of newfound Indian enthusiasm for the grouping, in turn, spurred by the military crisis in Ladakh, where India faces ongoing Chinese troop incursions across the two countries’ disputed border.

But the Quad is not bulletproof. Some experts have suggested that the economic and diplomatic effects of the devastating second wave of the pandemic in India will preoccupy the Indian government, sapping the Quad of capacity for any new initiatives. Others counter that India remains committed to competition with China—which is what really matters for the Quad—although its partners always expected ‘two steps forward, one step back’ from India.

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Related: On the Conversation Six podcast, Tarapore discusses the policy paper on which this blog post is based with Jawaharlal Nehru University Professor of International Politics Rajesh Rajagopalan. Listen:

The pandemic may well prove to be a hiccup in the Quad’s evolution, but a potentially much larger disruption may come from the ongoing Ladakh crisis itself. As I argue in a new ASPI Strategic Insights paper, the crisis has greatly increased the risk of a border war between India and China, which would present a defining test of the Quad. A possible war could either strengthen or enervate the Quad—depending on how India and its partners, including Australia, act now to shape the strategic environment.

Risk is a function of likelihood and consequence. The likelihood of war on the India–China border is still low—both countries would prefer to avoid it—but has risen since the crisis began. Both countries have greatly expanded their military deployments on the border and backed them with new permanent infrastructure to resupply and reinforce them. China has proved its revisionist intent with large and costly military incursions, although its specific objectives and plans remain unknown. And the interaction of both countries’ military strategies and doctrines would, on the threshold of conflict, promote escalation.

The consequences of a possible conflict would be dire for both belligerents and for the region. China — assuming it is the provocateur of conflict—would likely face some political rebuke from states that consider themselves its competitors, but it will work strenuously to reduce those costs, and would likely have priced them in to its calculations of whether to fight. India will suffer high tactical costs on the border, and may also suffer wider harm if China uses coercive cyberattacks against strategic or dual-use targets.

In a costly war, the repercussions may spill over to damage India’s recently developing strategic partnerships, especially with the United States and Australia. Despite generally favorable views of the US, the Indian strategic elite still harbors some latent suspicions. This was highlighted in two episodes in April 2021, when the US Navy conducted a freedom of navigation patrol through the Indian exclusive economic zone, and when the US was slow in delivering Covid-19 vaccine raw materials and other relief. Both instances quickly receded from the Indian public imagination—thanks to quick correctives from Washington—but they did reveal that, under some conditions, Indian perceptions of its new partnerships can be quickly colored by distrust.

A China–India border war may create exactly those conditions. There is a chance that conflict may result in a redoubled Indian commitment to the Quad, if New Delhi judges that it has no option but to seek more external assistance. Conversely, unless a conflict is managed well by India and its partners, it is more likely to result in Indian disaffection with the Quad. India deepened Quad cooperation during the Ladakh crisis partly as a deterrent signal to China, and partly because the Quad is still full of promise. However, after a conflict—when China hasn’t been deterred and has probably imposed significant costs on India—the Quad’s utility would have been tested, and probably not ameliorated India’s wartime disadvantage.

The task before Quad governments is to be sensitized to this risk and implement mitigation strategies before a possible conflict, to buttress the coalition in advance. As I outline in the ASPI paper, they could do this at three levels. First, they could offer operational support—such as intelligence or resupply of key equipment, as the US already has done in the Ladakh crisis—although Quad partners’ role here would be limited. Second, they could provide support in other theatres or domains—with a naval show of force, for example, although cyber operations would probably be more meaningful in deterring conflict or dampening its costs. Third, they could provide political and diplomatic support — signaling to Beijing that a conflict would harm its regional political standing.

For Quad members, the main goal would be to deter conflict in the first place, and, failing that, to preserve the long-term strategic partnership with India for the sake of maintaining as powerful and energetic a coalition as possible to counterbalance China in the long term.

This op-ed by Oriana Skylar Mastro and Zack Cooper originally appeared in Australian Financial Review.

Australia’s trials are not the first time Beijing has used economic coercion against another country.

It has become so common that we are becoming desensitised to it. Some notable examples include Beijing’s limitations on rare earth exports to Japan in 2010, Norwegian fish exports in 2010, Philippine tropic fruit exports in 2012, Vietnam’s tourist industry in 2014, Mongolian commodities trade in 2016, and South Korean businesses in 2017. In each case, Beijing sought to achieve a political objective by imposing economic penalties.

This case is different. Beijing has typically been ambiguous about the purpose or nature of its coercive economic statecraft. Despite evidence otherwise, it blamed the Japanese ban on meeting a yearly quota, the Philippine ban on pesticide exposure, the tourism drop to Vietnam on changing Chinese preferences, and the closure of South Korean stores on fire code violations. In Australia’s case, though, Beijing is doing away with these pretenses.

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China has not been shy this time about connecting its punitive actions to its unhappiness with Australian policies. The Chinese foreign ministry has listed a “series of wrong moves” by Australia for the disruption in relations. Beijing’s embassy in Canberra then gave a list of 14 “mistakes” to the Australian press.

These grievances include Australia’s foreign interference legislation, foreign investment reviews, funding for Australian think tanks, and unfriendly media reporting. Some of these criticisms are particularly ironic coming from Beijing, which often objects to foreign interference in other countries’ domestic affairs.

A core component of China’s strategy is a disinformation and propaganda effort designed to paint its moves as merely defensive, a proportionate and legitimate response to actions taken by the other side.

Australia has done nothing ‘wrong’

Let’s be clear: Australia has done nothing “wrong” in promoting and protecting its democratic institutions at home. It should not censor its media, obstruct analysis by outside experts, or shy away from safeguarding its democratic processes.

This time, the current trade restrictions are about more than making an example of Australia or showing smaller powers that they’ll pay if they have something to say about how the Chinese Communist Party governs at home. Beijing’s aims have taken on new proportions. Party leaders are now willing to punish democracies simply for upholding basic democratic principles within their own countries.

The message is clear: curtail some of your democratic principles or pay the price.

The US needs to work with like-minded states around the world to address this new threat. Free countries need to speak out together in Australia’s defence. If democracies do not hang together, they will hang separately. We should articulate that China’s actions are more than a violation of international law; they threaten the health of our democracies at home. Such a reframing would show Beijing that economic coercion will no longer be treated as a low-stakes tactic.

But words are not enough. We need coordinated action. US alliances are designed primarily to deter and defend against military attacks. Chinese actions make clear, however, that there are alternative methods for undermining peace, prosperity and freedom that our alliances do not adequately address. New alliance consultations to protect against economic attack would enhance our deterrence against China.

Washington should also launch a series of discussions with its allies to determine what new institutional mechanisms, commitments, and structures are needed to defend against economic attacks, not just military ones.

We should ensure the ability to take joint reciprocal action against Beijing in the economic realm, particularly to defend smaller countries. China engages in economic coercion because it is effective and relatively risk-free. But if instead like-minded countries responded together when one was attacked economically, this would go a long way in discouraging Beijing from employing such tactics.

Using all the tools of power

A critical first step is mapping dependencies on China and investigating how to limit over-dependence that open democracies to unacceptable economic vulnerability. As in the military realm, we need to enhance our resiliency against attack by avoiding over-dependence on any single import, export, or supply chain decency. This is a task that the so-called D10 (G7 plus Australia, India, and South Korea) should take up early next year.

The good news is a collective response to Chinese economic coercion will be more feasible under a Biden administration. President-elect Joe Biden and his senior advisers have articulated a preference for multilateral responses to Chinese aggression.

And while President Donald Trump relied mainly on military moves to warn and punish Beijing, Biden’s team prefers to make use of all tools of power. For these reasons, there has even been talk of rejuvenating past efforts like TPP. US allies and partners are also likely to see Biden as more reliable, making them more willing to undertake the risky venture of joining forces against Beijing.

The United States, Australia, and other allies and partners tried to welcome China into the international community. This was the right move. It has been good economically for many advanced economies, including Australia and the United States. But there is a flip side to every coin.

Australia has become too vulnerable to the whims of Beijing. And the US has few options to protect against such economic pressure. The incoming Biden administration needs to fundamentally rethink the nature of alliances so that countries like Australia have a third option the next time Beijing forces a choice between freedom and prosperity.