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Australia and China: from Trade War to Courtship

What is happening?

Amid mounting tensions between Canberra and Beijing, Australian Prime Minister Anthony Albanese traveled to China to “fix some problems” between the two countries. He met with the Chinese president Xi Jinping (習近平) in the Great Hall of People, while Chinese Premier Li Qiang (李强) reassured him of their “old friendship.” The purpose of the visit was to symbolically confirm the improvement in diplomatic and trade relations, a process launched by the new Australian government last year. 


What is the broader picture?

It was a busy day for the Chinese leader, as he met with the prime ministers of Cuba and Serbia and the South African deputy president on the same day. Trade and business were the focus of Prime Minister Albanese’s four-day program in China. He visited the Shanghai Expo with more than 250 Australian companies. Additionally, many Australian journalists got their visas to accompany the delegation and report on the visit’s success right on the spot. 

The last five years in Australian-Chinese relations were cold and demanding. Beijing was displeased after Scott Morrison’s demand for an inquiry into the origins of COVID-19, the ban on Huawei in the Australian 5G network, vocal criticisms of human rights abuses, and China’s regional expansionism. Eventually, China imposed trade tariffs and restrictions on Australian wine, beef, lobster, barley, and other agricultural products. 

However, over time, Beijing lifted some of the trade barriers, and according to Yun Jiang, former policy advisor to the Australian government, the outcome of the Chinese economic pushback was less severe than expected. The Australian economy has been surprisingly resistant. 

Still, the prime minister tries to endorse economic cooperation with the “most important trading partner.”

Only a few weeks before the visit, Cheng Lei (成蕾), an Australian journalist who was detained in China in 2022 for allegedly sharing state secrets overseas, was released from prison. Dr. Yang Hengjun (楊恒均) was not as lucky. This Australian democracy activist and blogger of Chinese origin who was detained in 2019 for espionage still awaits the verdict of his trial. In his case, the negotiations were unsuccessful despite serious concerns about his worsening health situation. Chinese authorities seem to have no interest in exchanging their former diplomat and secret service agent for wine and lobster. 

Albanese’s visit to China, which took place on the 50th anniversary of Australia-China diplomatic relations, has been described as highly symbolic and a breakthrough or a turning point in China-Australia relations. As serious domestic issues weaken China and slow down its economy slowdown, this visit was not another example of kowtowing to the Chinese emperor. China and Australia now enjoy more balanced relations. Beijing’s interest in getting Australia’s support in admission to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), an important regional trade pact, is unlikely to be supported by Australia. According to Australian officials, Australia’s position on the South China Sea, the rule of law, and international waters has remained the same. 

While the two countries remain at odds on some issues, including an Australian ban on using the Chinese tech giant Huawei’s technology in 5G networks, relations have been slowly improving. Beijing still forbids imports of copper and timber but has returned to purchasing Australian oil, beef, wheat, and barley. A dispute at the World Trade Organization has been halted following China’s decision to review its tariffs on Australian wine.


Why it matters?

Australia is an important middle power in the Indo-Pacific region, which struggles to maintain its strategic influence. After visiting Beijing, the delegation did not return to Australia but continued to the Pacific Islands Forum in the Cook Islands to discuss key environmental issues with Canberra’s partners. Australia has a lot of homework to do as it wants to remain a regional leader and retain its sphere of influence in the region. 

Albanese repeated his mantra as he sought to “cooperate with China where we can, disagree where we must, and engage in our national interest.” More experienced world leaders warn him to be cautious about the perceived Chinese optimism. Only time will show whether he can keep the second part of the statement.