Australian Foreign Minister Marise Payne made international headlines last week when she announced that the federal government would be abruptly ending two agreements with China’s Belt and Road Initiative, President Xi’s signature long-term global infrastructure project.
Beijing was quick to condemn Australia’s decision as “unreasonable” and warned of potential retaliation and the impact this would have on China-Australia relations, which have been steadily worsening since 2018. The Australian government resolutely stood by its decision: Defense Minister Peter Dutton addressed the controversy in an interview by stating, “We aren’t going to be bullied by anyone, we are going to stand up for what we believe in.”
What’s not immediately clear is how exactly the decision to end the BRI agreements fits into a cohesive framework of Australian values. The move arises from the Australian federal government’s newly-granted power to veto foreign noncommercial deals signed by its states and territories, bestowed by the passage of the Foreign Relations Act (FRA) in December of 2020.
The two agreements in question were signed by the Victorian state government in 2018 and 2019. Neither was legally binding or delineated obligations. The 2018 document was a memorandum of understanding that Victoria would work with China’s national development and reform commission on unspecified future infrastructure projects. The 2019 document sought to provide a framework for future areas of cooperation in a wide variety of potential industries, including infrastructure, biotechnology, and agriculture.
The fact that cancelling these agreements will have no immediate material benefit for Australia on trade relations or existing international obligations has led some pundits to categorize the decision as symbolic posturing.
But if the decision is meant to be a symbol of Australian strength against China, it’s not being embraced: the Australian government has sought to avoid making a spectacle out of the cancellation. Minister Payne stated that the two agreements were simply “inconsistent with Australia’s foreign policy or adverse to our foreign relations.”
When pressed, the Minister also denied that the passage of the FRA in 2020 or this cancellation are aimed at China. But China’s foreign ministry argued that assertion is belied by the fact that Canberra’s review of 1,000 agreements between states and foreign entities led to just four cancellations: one with Syria from 1999, another with Iran from 2004, and the two deals with China.
Tension between China and Australia has been ramping up in recent years. In 2018, the government banned controversial Chinese telecommunications giant Huawei from building 5G networks in Australia. Last year, Australia called for a World Health Organization investigation into the origins of the coronavirus in Wuhan. China responded with anger and began imposingtariffs on a number of lucrative Australian exports.
The Minister’s announcement in mid-April left many business leaders in Australia fearing further retribution and bracing for negative trade consequences. China is Australia’s largest trading partner.
The Belt and Road Initiative has caused problems, too. Since 2018, the two nations have been in something of a bidding war in the Pacific, a topic I’ve previously written about. Australia has tried to counter China’s growing influence in the region by heavily investing in infrastructure projects and aid. The Xi administration’s aspirations for the Belt and Road Initiative heavily rely on this region.
It’s worth noting that Australia has flip-flopped their position on the Belt and Road Initiative, or at least has been contradictory. In 2017, Prime Minister Macolm Turnbull stated in a speech that Australia was eager to work with China on Belt and Road Initiative projects and that “global infrastructure investment is a good example of where countries should work together.” These sentiments were echoed by Prime Minister Scott Morrison in an interview with Chinese publication “Caixin” in November of 2018. Indeed, the 2018 agreement now being scrapped actually received direct input from the federal Department of Foreign Affairs.
The point is not to rehash every twist and turn of the tumultuous China-Australia relationship. Rather, this context helps explain why there is a lack of consensus and clarity on what the Australian government’s decision means.
Australia’s move to abandon two major cooperation agreements with China is not inherently alarming—there’s certainly room to support Australia taking a more assertive approach in its relationship with China. But such an approach can only be effective if it is deployed strategically and informed by a comprehensive understanding of modern China. What’s concerning is the sense that not even the officials involved in the decision to scrap the agreements can clearly articulate the strategic rationale.
This highlights the familiar collective action problem that liberal democracies must overcome when figuring out how to respond to China’s rise and continually-evolving role in the global order. Australia and its allies, including the U.S., should work together to develop and coordinate a cohesive and long-term framework with specific goals and touchstones for Sino relations, and be transparent about what this entails.
There are certainly hopeful signs that such an era of coordinated relations with China might be possible in a world no longer contending with the neo-isolationist behavior of former President Trump. For example, in March, the U.S., Canada, U.K and E.U. collectively imposed sanctions on China for its ongoing “genocidal campaign” in Xinjiang against the Uyghur peoples.
Clear, coordinated, and consistent multi-national action leveraged sparingly to achieve specific goals is the best way forward for nations looking to stand up to China. Australia’s decision to end the BRI agreements and the Sino-Australian trade skirmishes demonstrate the relative inefficacy of political stunts or symbolic action, given the stark realities of global economic interdependence.
Above all, as a recent Review of International Political Economy article highlighted, liberal democracies must continue to grow their capacity to understand China and recognize “the particularities of its state-permeated economy with a distinct political culture and identity,” instead of taking a business-as-usual approach.
