Diplomatic relations between China and Australia have continued to deteriorate lately, hitting their lowest ebb in decades, in line with the worsening relations between the former with its archrival the United States.
Australia is the U.S.’ most important ally in the Asia-Pacific region. On one hand, deepening China-Australia relations have always influenced Washington’s policies while on the other hand, the “Land Down Under” also began to feel alienated by its closest ally during the Trump presidency.
However, it’s a new dawn since President Joe Biden took office. Kurt Campbell, his top Asian Affairs Advisor, announced in March 2021: “We have made clear that the U.S. is not prepared to improve relations in a bilateral and separate context at the same time that a close and dear ally is being subjected to a form of economic coercion”. Kurt Campbell reiterated the U.S. commitment to not abandon Australia, in a veiled swipe at China.
In fact, Australia-China relations have rapidly deteriorated in recent years. Similar to the U.S. and other western democracies, Australia has developed closer ties with China, as both countries have enjoyed a mutually-beneficial economic relationship.
Australian iron ore, coal and natural gas exports to China have helped fuel the rise of the PRC into a global industrial power. In a sign of deepening ties, the two countries even signed a free trade agreement in 2015. China has become Australia’s largest trading partner, in terms of both exports and imports.
However, over time, this seemingly-solid relationship has begun to fracture.
Canberra has started to feel growing unease about China’s more assertive foreign policy under President Xi Jinping, in particular regarding the hotly-contested South China Sea, Australia’s main trade route to other Asian countries.
Former Australian Prime Minister Malcolm Turnbull (2015-18) last year wrote a memoir entitled “A Bigger Picture” in which he opined: “Under Xi Jinping, China became more assertive, more confident and more prepared to not just reach out to the world, as Deng Xiaoping had done, or to command respect as a responsible international actor, as Hu Jintao and Jiang Zemin had done, but to demand compliance.”
Australia has been openly criticizing China’s policies in the South China Sea. Perhaps Australia can join hands with Indonesia to counter Chinese hegemony in international waters, especially in light of China’s construction of military installations on artificial islands to bolster its claim to much of the South China Sea, a key maritime route for global trade.
China has been accused of actively influencing the domestic politics of its trade partner countries through murky political donations. This is also what it was alleged to be doing in Australia. Turnbull warned that big Chinese money could eventually influence Australian government policies in favor of that nation, potentially undermining Australia’s national sovereignty.
Australia has sought to prevent the influx of political donations by introducing a sweeping new legislation aimed at curbing foreign interference in public policy decisions.
In 2018, China-Australia relations were at a low point when the Australian government, under Malcolm Turnbull, barred Chinese telecommunications giant Huawei from supplying Australia’s 5G network, citing security risks to its critical infrastructure.
It further reached a nadir in April 2020, when the incumbent Prime Minister Scott Morrison called for a joint international inquiry into the origins of the coronavirus outbreak, allegedly leaked from the Wuhan Institute of Virology. This infuriated China, which regarded such a move as a political maneuver to smear the country’s reputation.
In response, China hit back, cranking up a trade war to inflict economic pain on Australia. It started with suspending export permits for Australia’s top beef producer, followed by punitive tariffs on barley and wine. Then it instructed the country’s power plants and steel mills to stop buying coal from Australia.
As a result, it was reported that Australia lost an estimated of $7.3 billion in exports over a year. Among the worst-hit included the rock lobster industry which, due to its heavy reliance on Chinese consumers, collapsed almost overnight, after Beijing effectively banned imports.
Nevertheless, Australia seems to be holding steadfast in the face of China’s economic pressure. It is of the view that shrewd diplomacy is necessary, but one which must not compromise its core values and national interests.
Apparently, Beijing has not been able to inflict enough economic pain to bring Canberra to its knees. This is likely because the U.S., under Joe Biden has been providing economic incentives to its various partners, including Australia.
Economically speaking, the value of Australian exports affected by the trade barriers erected by China only constitute 0.5% of its GDP. The country has sought to diversify its consumer base by, for instance, diverting its coal exports to India.
China, on the other hand, cannot afford to entirely shut off Australian imports, as it also relies on Australian iron ore and lithium to support its electric vehicles and construction industry.
In a war of narrative, Beijing blamed the “root cause” of the cooling relations between the two countries on Canberra’s “series of wrong moves related to China”, according to Foreign Ministry spokesman Zhao Lijian.
Shortly afterwards, the Chinese embassy in Australia handed over a dossier of 14 points of dispute to the local press, which included, among others, accusations of Canberra unfairly blocking Chinese investment and spearheading a “trade war” over Beijing’s repressive actions in Hong Kong and Xinjiang.
In the same vein, a top Chinese diplomat presented U.S. Deputy Secretary of State Wendy Sherman with two lists of grievances Washington is expected to resolve during the latter’s official trip to the port city of Tianjin.
The future of China-Australia relations still seems bleak, as both sides hold their ground and continue to blame one another.
In April 2021, Australia’s foreign minister canceled two accords signed by the state of Victoria as part of Xi Jinping’s signature One Belt One Road (OBOR) infrastructure development initiative.
China blasted the cancellation, saying that it “harmed foreign relations.”
Lesson Learned
The People’s Republic of China has been trying to assert its influence globally by leveraging its economic clout. Australian has thus been “made an example”. But economic pressure on Australia has not weakened Canberra’s position on its Covid-19 origin theory as Australia is politically united in dealing with China, including the unanimous political support thrown behind the passage of the foreign interference law.
The U.S.’ pivoting back toward its strategic ally has also added to Australia’s confidence in facing up to Chinese economic coercion.
China-Australia tensions will consequently afflict both countries’ economic relations over the long term. The standoff might persist even longer, as long as the U.S. is actively involved in supporting its partner.
The “frontier” of this conflict lies in U.S.-China rivalry. If it further heats up, China could face further difficulties in its relations with Australia and other countries in the Asia-Pacific region.
Source: Independent Observer | Opinion Pages: 7 | Friday Edition August 6-12 2021
