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Australia and China: Diplomatic Thaw or Temporary Truce?

Elena Yi-Ching Ho | Australia Fellow

Image Credit: Kylie de Guia

After the Labor government’s election victory last May, years of diplomatic freeze between Australia and China have finally begun to thaw.


However, while warm gestures made by Beijing are welcoming and demonstrate positive signs for Australia-China relations, Canberra should remain cautious when reconnecting with its prominent partner in the region.


Previously, Canberra and Beijing enjoyed an amicable relationship that both sides have elevated into a “comprehensive strategic partnership”. In 2015, the China-Australia Free Trade Agreement took effect and Australia became one of the founding members of the Asia Infrastructure and Investment Bank, led by China. Moreover, large numbers of Chinese tourists and international students helped generate greater revenue for Australia's domestic economy.


However, the relationship grew fraught as several ongoing conflicts reached boiling point. In 2017, the Foreign Interference Scheme was introduced and commenced in the following year. The previous Chinese ambassador to Australia, Cheng Jingye, criticised the action as reflecting a “Cold War mentality”.


In 2018, the Australian government decided to ban Chinese mobile networks Huawei and ZTE from participating in the 5G network due to security concerns. Reflecting on that decision, Xiao Qian, the Chinese ambassador to Australia, recently claimed that blocking Huawei “perhaps could be described as the first shot that has really damaged our normal business relations.”


Then in 2020, relations sank to an all-time low when Australia joined the call for a global investigation into the origins of Covid-19. In retaliation, China imposed sanctions on key Australian exports including barley, beef, coal, timber, wine, and lobsters.


But mid-2022 seemed to mark a turning point, with a score of high-profile diplomatic liaisons: Anthony Albanese’s meeting with Xi Jinping at G20; Penny Wong and top diplomat Wang Yi in Beijing; and the recent virtual meeting between Trade Minister Don Farrell and his Chinese counterpart Wang Wentao, where they hinted at a Beijing visit in the “near future.” China has clearly signalled that the relationship is stabilising. Besides the positive communication between government officials, Australian coal imports have also resumed, and the Chinese government’s online study ban has driven thousands of students to Australia in a boon for the local economy.


However, Canberra should be cautious and continue to engage with Beijing strategically. Obstacles remain for repairing ties and it’s also unlikely that the relationship could bounce back to its pre-2020 state. Here’s why:


Human Rights

Australia has consistently criticised China’s poor human rights record such as violence against Uyghurs and other ethnic and Muslim minorities in Xinjiang, jailing Australian journalist Cheng Lei, and the human rights issues in Hong Kong after the 2019 protests. The government recently pledged to advocate awareness of China’s human rights issues “at the highest levels”. Although China states that it welcomes all “suggestions with constructive ideas”, it also warns Australia not to “smear” the country.


Taiwan

Taiwan as a potential flashpoint has sparked a significant concern for stability in the Indo-Pacific. Australia has aimed to stay neutral on the Taiwan-China issue and has urged nearby countries to help avoid escalation. However, as Washington’s key strategic ally in the region, Canberra is caught in the dilemma of supporting its friends while placating Beijing at the same time.


Competition in the Pacific

China’s growing presence in the Pacific has been alarming to Australia's national security community. Although Wang Yi’s tour around the Pacific Islands last year was largely unsuccessful and Chinese aid to the region has plummeted in recent years, its ambition to gain a stronghold in the Pacific remains clear and shows no sign of abating.


Trade

China lifting the coal ban recently has been promising, but it has been interpreted more as symbolism rather than a practical improvement. Although Australian miners welcome the renewed trade, the future is still uncertain, and Australia has since sought other reliable markets in the region such as India.


Additionally, although there is a discussion around resolving the two World Trade Organization complaints against China regarding the wine and barley bans, there is still no clear sign of consensus.


Since Labor formed government, its position on Australia-China relations has been clear. As both Anthony Albanese and Penny Wong reiterated several times, “[Australia] will cooperate where we can, we will disagree where we must.” While it is still very early to project how things will play out, one thing is for sure: Australia should exercise caution, while strategically engaging with China to “navigate the differences wisely”.

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