India is forecast to rebound to 9 per cent growth by 2021 but high subsidies and political whiplash from agriculture lobbies dominated domestic politics and trade deals even before the coronavirus. The budget notes severe supply-chain disruption and labour market dislocation are now endemic.

There is a bonus $6.6 million to encourage exporters to diversify into other areas including the European Union and the United Kingdom,but even this will come out of the existing Department of Foreign Affairs account which has alreadyhad to cut 60 jobs to meet its operations budget.

The only reasonable reading of this budget is that Australia is content with the trading status quo:China will drive our economy ever further. That is problematic as the events of the past year have shown.

Without genuine attempts at diversification,it leaves that other Australian national interest vulnerable to economic coercion:regional security.

There was a taste of it in the budget. A $304.7 million boost to support Pacific Island countries andTimor-Leste to recover from the impacts of COVID-19,but little else. Australia's allies,including the US and Japan,will be concerned there was nothing for south-east Asia,where China's influence is surging.

The revelation that aUS-funded,Australian-equipped naval base in Cambodia had been demolished is timely. China has funded expansion works at the base,raising concerns it will use the facility for access to the South China Sea from the Gulf of Thailand.

The government will rightly say it is spending an extra $270 billion on defence,but this misses the nuance of diplomacy that Australia is increasingly being asked to deploy by its allies in the region.

Prime Minister Scott Morrison on Wednesday welcomed comments byChina's former ambassador to Australia Fu Ying after she called for renewed dialogue following more than a year of escalating tensions.

"I'll take any encouragement because it is important for Australia,"he toldSky News.

Indeed it is. And it is possible that the status quo will continue,but it's also possible that it won't.

Tuesday's budget does little for diplomatic flexibility.