Explained: The diplomatic thaw in Australia-China ties and what it means for the Pacific

After years of strained ties and trade sanctions, Australia and China have intensified efforts to mend their relationship. On Monday, ministers of the two nations met in what was described as 'another important step’ in that direction

Isha Mehrotra February 08, 2023 18:19:45 IST
Explained: The diplomatic thaw in Australia-China ties and what it means for the Pacific

The thaw between the two countries started after Australian prime minister Anthony Albanese met China's Xi Jinping last year. AP File Photo

Australia and China have intensified efforts to iron out the differences and ‘stabilise’ the relationship between the two nations.

The virtual meeting held for over 90 minutes between China’s commerce minister Wang Wentao and Australia’s trade minister Don Farrell on Monday (6 February) was an “important step” in that direction.

This was the first talk between the trade ministers of the two countries since 2019.

What did China and Australia say after the meeting? What led to a plunge in relations between the two countries? How have the ties improved so far? What concerns are likely to continue between them? Let’s take a closer look.

‘Important step’ to resume normal ties

After the Monday meeting, China’s ministry of commerce said in a statement that Beijing is ready to facilitate dialogue with Australia on economic and trade issues as well as expand cooperation in areas such as climate change and the new energy sectors.

“At present, the economic and trade relations between the two countries are facing an important window period… the meeting is a significant step to push China and Australia’s economic and trade relations back on track,” Wang said, as per Reuters.

However, the commerce ministry also expressed concerns over Australia’s “tightening security scrutiny on Chinese investment in Australia”.

China said it “hopes Australia will properly handle the cases so as to offer a fair, open and non-discriminatory business environment for Chinese companies”, reported South China Morning Post (SCMP), a Hong Kong-based newspaper.

On the meeting with his Chinese counterpart, Farrell said it was “another important step in the stabilisation of Australia’s relations with China”.

“With China’s border now open, Australia looks forward to welcoming Chinese tourists and students back to our shores, as we did with over 1.4 million Chinese visitors in 2019,” Farrell added.

The statement by Australia also said the two leaders covered several trade and investment issues, including “the need for resumption of unimpeded trade for Australian exporters so that Chinese consumers can continue to benefit from high-quality Australian products”, reported SCMP.

The Australian minister said he has accepted Wang’s invitation to visit Beijing in the “near future”.

SCMP also reported that the Monday meeting between Farrell and Wang could lead to Australia’s prime minister Anthony Albanese visiting Beijing later this year.

Why did the relationship sour between Australia and China?

Australia and China have had a strained diplomatic relationship over the past few years.

Amid concerns over China’s alleged growing influence in Australian politics, in 2018, Canberra barred Chinese firms Huawei and ZTE telecommunications from building their 5G networks.

The same year in October, China started an anti-dumping investigation into Australian barley imports.

In 2020, the relations took a further nosedive after Canberra pushed for an international inquiry into the origins of COVID-19, severely irking Bejing.

Responding to this, the Asian giant alleged that the then-Scott Morrison-led Australian government was joining forces with the United States to spread “anti-China propaganda”.

In retaliation, China also imposed sanctions on a variety of Australian imports including coal, barley, wine, beef and lobsters.

The diplomatic altercation was again fuelled as China detained Australian journalist Cheng Lei and Australian writer Dr Yang Hengjun, accusing them of national security-related offences.

Concern over human rights also dented the ties between the two allies. As reports of China sending Uyghur Muslims to detention camps emerged, Australia responded and expressed “deep concern” over the “human rights situation.”

China also imposed a freeze on high-level talks with Australia.

In 2021, Australia approached the World Trade Organization to resolve trade disputes with China. Moreover, it also struck down the Belt and Road Initiative deal that China signed with the Australian state of Victoria, as per SCMP.

As per a study by KPMG and the University of Sydney, Chinese investment in Australia plummeted 70 per cent in 2021 from the US$1.9 billion reported in 2020, reported SCMP.

Amid growing tensions, Australia tried to stretch its markets away from China, which is the country’s largest trading partner – both in exports and imports. In this regard, Canberra signed a free trade deal with India which came into effect in December last year.

However, even as tensions prevailed, China remained Australia’s largest export partner as Beijing restrained from restricting the highly lucrative iron ore trade, noted Bloomberg.

How are the ties slowly improving?

The relations between Canberra and Beijing have “improved substantially” since the Albanese-led Labor government came to power in Australia last May, as per The Diplomat. 

The thaw started in November 2022 after Chinese president Xi Jinping met Australian prime minister Albanese on the sidelines of the G20 summit in Indonesia’s Bali.

The meeting between the two leaders paved the way for Australia’s foreign affairs minister Penny Wong’s official visit to Beijing last December. This resulted in both sides committing to hold dialogues on wide-ranging issues including defence, as per The Conversation.

Since then, China has also reportedly eased its unofficial ban on Australian coal imports.

Australia will also be able to export lobsters to China in March this year, as per the SCMP report.

Explained The diplomatic thaw in AustraliaChina ties and what it means for the Pacific
Australian foreign minister Penny Wong travelled to Beijing last year in December. AP File Photo

Last month, Chinese ambassador Xiao Qian said Beijing and Canberra are deliberating if Australia’s complaint at the World Trade Organization on Chinese tariffs on wine and barley could be resolved bilaterally.

Can the ties fully go back to normal?

Only time will tell.

Carl Thayer, an emeritus professor of politics at the University of New South Wales in Australia, told SCMP that the meetings such as the Monday ones are “baby steps”, especially as Australian exporters and Chinese buyers have already turned to other markets.

“The expectations [in Australia] have always been tempered,” Thayer added.

According to Wang Yong, a professor at the School of International Studies at Peking University, for the two nations to resort to trade ties to pre-2020 levels, Beijing would want Canberra to “step back from the pursuit of stronger security ties in the Asia-Pacific region led by the United States”.

“I think the gradual resumption of normal trade relations is good for the interest of both sides,” Wang told SCMP.

“I think it’s possible to return to pre-2020 levels, but both sides have to pay attention to a more challenging issue, which is the role of the US,” the professor added.

Notably, Australia has bolstered its alliance with the US and its security partnership with Japan even as its diplomatic detente continues with Beijing.

Over the last few years, Australia has tried to connect with “like-minded democracies” such as Japan, India and the US as well as reduce its dependence on China.

Australian defence minister Richard Marles has also expressed willingness to further deepen ties with the US.

He said last October that Australia’s “alliance with the United States is completely central to our national security and to our worldview”.

In Japan last December, Marles said Beijing was pursuing “the largest military build up since World War Two … without transparency or reassurance to the region of China’s strategic intent”.

China has been wary of the Quadrilateral Initiative (Quad) – comprising the United States, India, Japan and Australia, as well as Aukus – a trilateral security partnership between the United States, United Kingdom, and Australia.

Formed in 2007, the Quad is seen by analysts as an effort to counter China’s expansion in the Indo-pacific region, as per Indian Express.

The Aukus partnership, which aims to provide “conventionally armed nuclear-powered submarines” to Australia, has faced flak from China which has called it “a violation of the object and purpose” of the Nuclear Non-Proliferation Treaty.

Reiterating China’s concerns over Aukus, Xiao said last month that the deal might serve the interests of other countries and not Australia’s – an indirect reference to claims that Canberra will become dependent on the US.

With inputs from agencies

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