Australia’s government has cooled things down with Beijing—at least, for now. But while the relationship may be less heated, beneath the surface it is no less contentious.
Australian Prime Minister Anthony Albanese—ably assisted by his foreign minister, Penny Wong, and defense minister, Richard Marles—should be applauded for lowering the temperature between both countries.
China turned fiercely against Australia after a call for investigation into COVID-19’s origins in April 2020 by then-Prime Minister Scott Morrison. The relationship reached its nadir later that year, when the now infamous list of “14 Chinese Grievances”—which included Australia’s banning of Huawei from its 5G network, restrictions on Chinese ownership in critical Australian infrastructure, foreign interference laws, and Australia’s ongoing support of a free press—was posted by the Chinese Embassy in Canberra as the rationale for a sweeping series of sanctions on Australian exports.
After several years where Canberra’s calls went unanswered in Beijing, billions in sanctions were placed on Aussie goods, several Australians inside China were arrested, and Chinese state media described Australia as “chewing gum stuck under China’s shoe” while distributing doctored images depicting Australian soldiers murdering Afghan babies, a return to niceties shouldn’t be discounted.
As Albanese told attendees at Singapore’s Shangri-La meeting in June, diplomatic dialogue is the “first and most fundamental guardrail” of diplomacy. Albanese rightly asserts that years of “deep freeze” between Australia and China created conditions for both countries to “assume the worst of one another.”
But behind the smiles and photo ops, the strategic tension between both countries is only intensifying.
Even in trade, where Australia’s resource-heavy economy has long complemented Chinese manufacturing, highly politicized Chinese sanctions on Australian goods remain firmly in place.
This highlights the challenges of dealing with China. The wolf warrior tone might be mildly diminished, but the substance of expansionist Chinese Communist Party policies remains.
Albanese said in November 2022 that his government will define the relationship as one where Australia and China will “cooperate where we can” but “disagree where we must.”
Only, what if actual agreement is essentially impossible?
China’s defense minister, Li Shangfu, gave the Shangri-La audience a taste of how China views negotiations it doesn’t like when he commented on freedom of navigation exercises by saying “in China we always say, ‘Mind your own business.” Quite.
Given China’s attitude to intractable issues, can sovereign nations such as Australia coexist with the Chinese Communist Party without capitulating to Beijing’s demands of obedience?
The persistence of China’s coercive trade sanctions against Australia should give us pause. China implemented these with the express purpose of breaking Australia’s national will. That they failed to do so is hardly the point.
For all the diplomatic glad-handing, billions of dollars in sanctions on Australian goods such a wine, barley, and lobster are still active and have been so for years at enormous financial cost. In sectors where sanctions were lifted, such as thermal coal, China simply realized it needed the imports more than it wanted to punish Australia and capitulated first.
Worryingly, China’s state media is presently debating how Australia might reward China in exchange for the lifting of the very trade sanctions it imposed on Australia for having the temerity to defend its own sovereignty and national interests. The CCP mouthpiece, the Global Times, has called this intention “goodwill,” but it’s not exactly the stuff of stable and meaningful friendships.
Though Albanese has made it clear that China will receive nothing from Australia for merely doing the right thing—after all, this would the equivalent of paying diplomatic protection money—the idea that Beijing still believes its punishments should extract concessions suggests we can expect more, not less, of this type of behavior.
But talking is one thing; getting along is another entirely.
As Wong has rightly asserted in public remarks [1]and interviews, any stabilizing of relations can’t be called a “reset” because every policy considered contentious by China from previous Australian governments remains firmly in place.
And herein lies the rub of Australia-China relations: The problems that previously derailed things have only become worse.
On questions of sovereignty or core national interest, you can’t skirt core issues or change binary facts by being more polite. A no will always be a no. Either you’re happy to let Huawei build your 5G network, or you’re not. Same goes for Chinese bases in the Pacific.
And one thing we know for sure: China doesn’t take bad news well.
Since Albanese came to power, Australia has doubled down on key diplomatic and strategic architecture.
Australia will acquire 5 Virginia-class nuclear submarines before partnering with the United Kingdom and United States to construct a new AUKUS-class sub—a partnership that China absolutely hates.
After signaling a major increase in defense spending via the Albanese Government’s recent Strategic Defense Review — a document expressly naming the military threat posed by China — Australia participated in the recent Balikatan exercises with the United States and Philippines, and will host India’s Malabar exercises in August.
And though the Quad leaders’ meeting scheduled in May was postponed, Indian Prime Minister Narendra Modi’s visit was part of the deepening commitment between the other emerging Indo-Pacific superpower and Australia.
Meanwhile, China is continuing its efforts to establish a military base in the Solomon Islands through security agreements with an insecure government. Given that Imperial Japan invaded the Solomons in 1942 to strategically choke continental Australia, we can assume that Chinese President Xi Jinping hasn’t chosen the idyllic islands for their holiday potential. And though China’s attempts to form a wider regional security agreement were rebuffed by members of Pacific Islands Forum, it hasn’t given up on the vision of having Chinese military vessels patrolling Australia’s shores.
For decades, national leaders asserted that Australia would not need to choose between its economic relationship with China and its security relationship with the United States.
In the end, China made the decision for Australia with its withering attacks on Australian sovereignty.
Even with an ostensible China-Australia free trade agreement, the issues of supply chain reliability, sensitive technologies, competition for new industries, and national security are increasingly fusing into one core consideration. There will be no going back for Australia or anyone else.
Presently, China is subsidizing an expansion of its domestic iron ore production, hoping to decouple itself from Australia’s largest export. For its part, Australia is signed onto the collective democratic effort to break Chinese domination of future technologies by becoming the reliable supplier of rare earths and downstream batteries. The Biden administration recently designated Australian critical mineral and defense industry suppliers as “domestic sources” under the Inflation Reduction Act, offering one tangible example of this permanent shift.
So far, Australia has found new markets for its sanctioned goods while using rule of law mechanisms in the World Trade Organisation (WTO) to challenge China’s use of trade as a geopolitical weapon.
However, Australia’s decision to drop its case in the WTO against Chinese tariffs against its barley—a case insiders say it was poised to win—is a risky maneuver and will test whether Aussie good faith will be reciprocated via Chinese action.
Xi was desperate to avoid a landmark WTO ruling against China’s use of trade coercion for geopolitical purposes given his use of the tactic against Lithuania, South Korea, Japan, Taiwan, Canada, the Philippines, and the United Kingdom.
Though China would have likely ignored any WTO ruling—just as it thumbs its nose at the Hague’s finding that China’s artificial and militarized South China Sea islands are illegal—the upholding of the rule of law on countervailing and anti-dumping duties would be a valuable victory for Australia, the EU and 12 other nations signed onto the case, just as Japan’s case against Chinese rare earth coercion was nearly a decade ago.
China is internally reviewing its anti-dumping action against Australian barley and said it will provide a decision in due course. But each day the sanctions remain in place is an example of an Australia quid without the Chinese pro quo. Even if China eventually lifts tariffs on Australian barley and wine, the damage from the tariffs remains real, and no Chinese compensation will be forthcoming.
While China might believe it is winning with such tactics, the measures against economic coercion announced at the May G-7 meeting in Japan prove that the world is taking note and responding accordingly. And as Penny Wong has said, Australia can always restart its case.
While stable for now, it’s harder and harder to see areas of agreement between Australia and China. Or anyone else, for that matter.
An early test of the stabilization may have already arrived via Beijing’s decision to place “bounties” of 1 million Hong Kong dollars (about $130,000 in the United States) on the heads of eight Hong Kong democracy activists, including Australian citizens Kevin Yam and Ted Hui.
Australia has previously rejected the creation of extradition treaties with China, thanks to a successful rear-guard action by the then Labor Opposition, and it is impossible to see the Albanese government allowing for anything untoward to happen to Australians residing in Australia. Albanese has declared the bounties “unacceptable,” stating Australia and China “do disagree over human rights issues.”
Nevertheless, given that the Chinese Communist Party is holding Australian nationals Cheng Lei and Yang Hengyun as part of its ongoing approach to hostage diplomacy, the crushing of democratic Hong Kong and now global pursuit of those who still hold a candle for it highlights the growing—and largely irreconcilable—chasm between the worldviews of democratic Australia and Xi’s China.
While Albanese and his cabinet will likely find a way to step through this particular point of contention, one gets the sense that soon enough a Chinese request is coming that will be zero sum for both sides. And what then?
History tells us that tough decisions will be received poorly by Beijing, even if they come covered in diplomatic sugar or wrapped in rhetorical bows. And there will always be a next time.