Squiz Shortcuts - Australia's relationship with China

Your Shortcut to… Australia’s relationship with China

Australia’s diplomatic relationship with China is back in the spotlight, with PM Anthony Albanese in the middle of a 6-day visit to boost trade and tourism. The relationship is tricky to manage given China’s ambition to grow its influence in the Indo-Pacific and our ties with its biggest rival, America. So in this Squiz Shortcut we’ll get you across:

• the recent history between our countries

• the issues at play

• and where things are heading…

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Let’s take the temperature - where are we at with China right now?
After a rocky period, Australia’s relationship with China has now, to use the PM’s words, “stabilised” and we’re making progress in restoring our trade partnership to what it once was.

Give me a quick rundown of what’s happened…
China grew to become our biggest trading partner in the late 2000s, when they bought the lion’s share of our iron ore, coal and agricultural exports. But the friendship started to fray around 2017 when the Turnbull Coalition Government brought in foreign interference laws.

What were they about?
The laws were aimed at limiting Chinese political influence in Australia. And the following year, we banned Chinese telco Huawei from taking part in the rollout of our 5G network - and the reason we gave for that was security concerns.

Can you explain that a bit?
There were some concerns it might be able to somehow hack that system and find out confidential information. The Chinese government wasn’t pleased about that decision, and tensions rose further a few years later when the pandemic hit.

What happened then?
Our PM at the time, Scott Morrison, followed the US and Europe’s lead in calling for an independent investigation into the origins of the virus. There was a huge falling out over that - China was seriously offended.

What was the damage?
China whacked trade sanctions on a raft of our export products including wine, barley, beef, coal, lobster, coal, timber and cotton just to list a few… They didn’t officially call it punishment, but the timing was pretty clear. 

What did it cost us in dollar terms?
Reports say those sanctions cost us around $20 billion in exports. Just to give you an example, our wine exports dropped by more than 90% from their peak in 2019… And that forced many of our producers to find new markets or severely scale back their operations. There was a lot of criticism of the Morrison Government at the time, and when Labor, led by Albanese, was campaigning as the opposition against it in 2022, repairing and “stabilising” relations with China was a big focus.

Did it work?
Well, Albanese won the election, and his government put its plan into action when Foreign Minister Penny Wong visited China late in 2022 on our first diplomatic trip there in 4 years. The visit was seen as a breakthrough, and our 2 countries agreed to start high-level talks again. 

Were the sanctions lifted?
Gradually - beginning with coal in early 2023, followed by barley, timber, and most recently wine and lobster late last year. When it comes to trade, there are definite signs that our relationship is on the mend - and the PM’s visit is another sign of that…

What is Albanese aiming to get out of the trip?
His main game is to promote trade and tourism, and to help with that he’s got 14 CEOs from Aussie companies accompanying him. It’s the longest bilateral visit to a single country he’s done since being elected in 2022, and it’s a signal to Beijing of its importance. But our relationship is more complex than that, and it’s when issues of national security and defence are raised that things can get tricky.  

How so?
China’s ambition is to grow its influence in the Indo-Pacific region - our neighbourhood - and replace the US as the dominant power. So there’s a big conflict of interest there, given our close ties with America. And we’ve also seen China make some bold military moves in the region too, which has caused concern not just with us, but with our Western allies more broadly.

What sort of moves?
They include attempts to establish military bases on neighbouring Pacific countries, making territorial claims in the South China Sea - it’s an open trade route so it’s important that it stays that way, and having an increased military presence near Taiwan. We’re also not thrilled about them sending spy ships under the guise of scientific research into our neck of the woods to carry out military exercises and circumnavigate our coastline.

Have they done that recently?
You might remember a flotilla of Chinese warships carried out military exercises off the coast of NSW earlier this year using live ammunition which interrupted commercial flights. They also sent another surveillance ship to circumnavigate the coastline as recently as April - and they’re expected to closely monitor Talisman Sabre exercises happening here in Oz and PNG over the coming weeks.

What’s Talisman Sabre?
It’s a large-scale joint military exercise held every 2 years that’s run by the Australian Defence Force and the US military, but it includes troops from lots of countries. This year around 30,000 personnel from 19 nations are taking part or observing. 

What is it for?
It’s to simulate combat scenarios on land, sea and air, which are designed to prepare us for a real-life war situation, while showing unity between allies in the face of growing regional threats…

Like the one potentially posed by China?
Bingo… So, there are those tensions at play - but we’re also often caught in the middle of the rivalry between China and the US.

How so?
Just this week, we’ve seen that ramp up with America openly calling for us to pick a side. The US is carrying out a review of the AUKUS security pact between our countries and the UK, and it’s been putting extra pressure on us to raise our defence spending. And the PM’s first day of his China trip, when all he wanted to talk about was trade, was overtaken by the US wanting us to give assurances of our support in the event that China invaded Taiwan. 

What’s our position on Taiwan?
The Albanese Government treads very carefully around this issue… It supports the ‘One China’ policy while recognising, but not necessarily endorsing, its position that Taiwan is part of China. But at the same time, it also backs peace and stability in the Taiwan Strait... 

How did the PM handle those questions?
When he was asked - while Chinese officials were looking on - what our role would be if the US went to war with China over Taiwan, Albanese said Australia has “a clear position and we have been consistent about that … We don't want any change in the status quo”. Of course, our political and military allegiance has always been with our allies, and the AUKUS pact sees us closely aligned with the US and the UK - and a big reason for that pact is to ensure our protection against China’s growing military strength. 

So, how does this all affect our relationship with China?
Well, it puts our government in a tight spot when it comes to improving our relationship but we’re hoping that China softens its stance towards us in light of the global economic waves being created by US President Donald Trump’s tariffs (and if you want to know more about those, this Squiz Shortcut will help…). 

So these relationships are important to maintain?
Very… Albanese is set to meet with Chinese President Xi Jinping during this visit. It’ll be his second meeting with Xi in China after they met in Beijing in late 2023, where both sides stressed the importance of “mutual respect” and “constructive engagement”.

Which means…?
Forging ahead… And we’re starting to see more of that not only in trade, but also in the numbers of foreign students and tourism picking up again in the wake of pandemic restrictions being lifted. But we’re still being cautious in our dealings. For example, there are certain inroads that China wants to our industry that the government is wary of letting them access.

Like what?
Well, we’ve put some barriers up by shutting out Chinese-developed AI like DeepSeek from our government devices; we’re actively pushing to develop our own processing facilities for our critical minerals so we don’t have to send them to China for refining; and Albanese says he’ll take steps to return the Port of Darwin from a Chinese-owned company back to Australian hands... 

So, what are we likely to see going forward?
China hasn’t backed away from its ambitions in our region and its military activities are continuing, so going forward, we can expect more of the same balancing act by the government as it tries to juggle all of those competing interests when it comes to our dealings with China.

Are we likely to see more of that from the PM this week?
Almost certainly… A lot of eyes are on Albanese as he navigates what some experts are calling “a very perilous path”.

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Onto our Recommendations

Reading: This article from The Conversation is a good one if you’d like to dive a bit deeper into the complex nature of our relationship with China and some of the issues Albanese may have to manage during his visit.

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