Australian Foreign Minister Penny Wong visited China in December to commemorate 50 years of diplomatic relations between the two countries. After meeting his Chinese counterpart Mr. Wang Yi, Wong said that the two governments agreed to continue high-level dialogue on ways to "achieve what I think is in the best interest of our countries, exporters and consumers." The Chinese Foreign Minister agreed that "dialogue is a prerequisite for managing this relationship wisely." The two countries have been locked up in multiple disputes since Australia chose to openly follow the American agenda in the Asia–Pacific region in 2018. China’s retaliatory tariffs on key Australian goods have seen billions of dollars worth of Australian exports blocked from entering China.
On December 21, 1972 Australia first formally recognized Beijing as the legitimate government of China. While the foreign ministers met in Beijing, Chinese President Xi Jinping and the Australian Prime Minister Anthony Albanese spoke over the phone to mark the anniversary. President Xi reportedly told Prime Minister Albanese that China would like to strengthen ties with Australia and "promote a sustainable development of the China-Australia comprehensive strategic partnership" based on mutual respect and mutual benefit.
Australia–China relations emerged after Australia started deregulating its economy in the early 80’s and China launched its open-door economic policy under Deng Xiaoping. As how most bilateral relationships begin, it was a relationship of convenience and strategy: China needed resources, and Australia had plenty of them.
While China grew exponentially, Australia’s exports to China shielded the country from the 1997 Asian financial crises and 2008 global financial crises. With China becoming its biggest trade partner, the “Australian economy grew three times faster than Japan’s, twice as fast as Europe and one-third more quickly than the U.S.” Before COVID-19 Australia was the number one destination for Chinese tourists. 200,000 Chinese students were studying in Australia at that time – one third of all foreign students.
Relations between the two countries turned sour in 2018 when Australia banned Huawei and ZTE – the two major Chinese telecommunication companies – ostensibly over national security concerns. Australia increased its scrutiny of inbound investments, passed laws against foreign political interference. But when in 2020 then Prime Minister Scott Morrison called for an international investigation into the origins of COVID-19, the Chinese were incensed and retaliated by imposing high levies on a host of Australian products including wines, crayfish, coal and barley. Wine exports were hit particularly hard as its exports to China fell from nearly 165 megaliters in 2018 to less than 10 megaliters in 2021. The Chinese, with some justification, viewed Australia’s actions as blind alignment with the American interests against China. Australia complained of unfair treatment to the WTO.
With exports to China plummeting, the Australian economy has been suffering through its first recession since 1991. This is “bound to increase pain as Australia prioritizes ideology in aligning with the U.S. over trade and the well-being of people in affected industries.”
Notwithstanding the friction, “China remains Australia's largest trading partner, importing $164.82 billion worth of goods in 2021, up 40 percent on the year, according to Chinese government figures. In the same year, China's exports to Australia reached $66.38 billion, a 24 percent increase.”
Within the region however, China sees the elevation of Quad – that groups Australia with Japan, the U.S., and India, and the subsequent creation of AUKUS nuclear partnership program grouping Australia with the UK and the U.S. as directed against China. In addition, the U.S. is stationing six nuclear capable B-52 bombers in Australia’s Northern Territory. This move entails a substantial increase in Australia’s commitment to America’s military posture in Asia – Pacific and is bound to increase tensions with China. This is China’s front yard – an area China cannot leave in the hands of its adversaries.
Australia’s change of government in May 2022, from deeply hawkish Morrison to the center-left Labor Party under Anthony Albanese, indicated the possibility of improvement in relations. Consequently, the two foreign ministers first met in July at the G-20 foreign ministers in Jakarta. Subsequently, Prime Minister Albanese and President Xi Jinping met during the G-20 meeting in Jakarta in November – the first summit between the leaders of the two countries since 2016.
This cloud of distrust between the two also puts into question China’s application to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) the 11-member trade bloc, which America jettisoned as soon as Trump came to power. Though Canberra says it is open to talks for resolving issues the Australian Trade Minister Don Farrell said a couple of months back that he doesn’t believe “there’s any prospect that China could join” the CPTPP.
Andy Mok, a senior research fellow at Beijing’s Center for China and Globalization blamed Canberra for the “provocative actions” that led to downturn in relations and was “cautiously optimistic” over prospects of improvement of bilateral relations framing it as “good for the region as well.”
Before their spat began in 2018 the two had no historical, political or economic grievances, which was a rarity in international relations.
Once Australia chose to join America’s policy direction against China, it could be said it torpedoed to its own geo-economic and geo-political interests. It will now become a surrogate for U.S. interests in the Southwestern Pacific and, as predicted by defense and political analyst Sameed Basha, “when dust settles and Australia recovers from its self-inflicted wound, it will realize that China has the world to trade with, but Australia’s economic success was made in China.”
