Australia-U.S. Submarine deal could prompt China to expand military capabilities

China has denounced a nuclear submarine deal between the United States, the United Kingdom and Australia – and tensions in the Indo-Pacific region are likely to continue to rise, an analyst with the consultancy said Eurasia Group.

“Given the geography of the region and given the security challenges in the region, one would hope that caution would prevail,” said Ali Wyne, senior analyst at Eurasia Group.

“I think right now the balance of military power is definitely going to become more and more contested,” he told CNBC’s “Squawk Box Asia” on Monday.

The United States, United Kingdom and Australia announced a new security partnership last week that aims to strengthen stability in the Indo-Pacific region. It comes as China continues to expand its military presence and influence in the region.

As part of the deal, the US and UK will also help Australia acquire nuclear-powered submarines, which will allow the Australian Navy to help counter Chinese nuclear-powered ships. In the region.

But a diplomatic crisis erupted.

Following the deal with the US and UK, Australia canceled another deal to purchase conventionally powered submarines from France. The French were angered by the deal and recalled their ambassadors from the United States and Australia.

China has also denounced the agreement.

Chinese Foreign Ministry spokesman Zhao Lijian criticized the three countries for “seriously undermining regional peace and stability, intensifying an arms race and harming international nuclear non-proliferation efforts,” according to a Reuters report.

Wyn said there had been talk of “the balance of military power” in the region “shrinking in favor of Beijing.”

However, he added: “With this agreement, I think the military balance will move a little further away from Beijing.”

The announcement of the security partnership comes as Biden attempts to reframe the United States’ approach to China’s growing power in the wake of the Trump administration’s trade war with the Asian giant, and as the world continues to fight the Covid pandemic, which was first discovered in Wuhan, China.

Biden had previously said his approach to China would be different from that of his predecessor and that he would work more closely with allies of the United States to push back Beijing.

Australia’s new fleet of nuclear-powered submarines will likely not be delivered until the 2030s, Wyne said.

In the meantime, China should strengthen its military capabilities, he said.

“I think we can expect China to step up its military modernization efforts, it wants to postpone these efforts,” Wyne said.

“The question then becomes what will China be able to accomplish in this decade,” he said. “And what contribution will this new fleet of nuclear-powered submarines contribute to the deterrent capability, from – say in the early 2030s – into the future.” “

China claims almost all of the South China Sea, a huge body of water that stretches about 1,200 miles from the Chinese mainland. The sea covers a massive area of ​​1.4 million square miles and is bordered by eight countries with a combined population of around 2 billion people.

The Asian giant has had skirmishes with other countries over their claims to the South China Sea. The other major demanders of the resource-rich waterway are the Philippines, Vietnam, Malaysia, Taiwan and Brunei.

The United States does not claim any part of the South China Sea, but has long promoted “freedom of navigation” by air and sea across the waterway, which Washington has accused Beijing of militarizing.

Wyne, from Eurasia, said there was a “low probability” of security crises occurring in the South China Sea.

“But it increases the pressure and increases the risk of miscalculation,” he said.

Wyne’s sentiment was shared by Michael Klare, professor of peace and global security studies at Hampshire College. Klare warned that the security partnership between the United States, the United Kingdom and Australia may not be “a path to peace and stability” in the Indo-Pacific.

“Tensions between the United States and China were increasing before that. There were growing tensions over Taiwan and the South China Sea; there was an increase in US naval commitments in those areas, China responded in kind – so you have a buildup of military tensions in Asia, ”Klare told CNBC’s“ Squawk Box Asia ”on Tuesday.

“It will be tit for tat, everyone is going to have to increase their abilities now.”

– CNBC’s Amanda Macias contributed to this report.