Finding a way forward: A review of Australia’s relations with China

Feb 1, 2024
Grand Chinese Doors

Let’s not reject forty years of cooperation and exchange with China. Australia has greatly benefitted from trade, investment, cultural exchange and collaboration over these decades. Now, as the United States and Europe threaten to raise tariffs, erect barriers to exchanges and prioritise security concerns, it is time to remember when we espoused multilateralism and openness.

The decade of the 1980s is known in China as the Reform and Opening Up Period. It marked a massive shift from Maoist policies of self-sufficiency. Communist Party General Secretary Deng Xiaoping saw that neighbouring economies such as Hong Kong, Taiwan, Japan and Korea had been able to lift living standards through integration into the global trading system, and he began to dismantle the central planning system that had governed domestic production and trade. As Senior Trade Commissioner in Beijing at the time, I saw new opportunities for Australia to engage with China almost every day and worked to maximise benefits for Australia through a coordinated “China Action Plan.” Working with then Ambassador Ross Garnaut, we began negotiations that led up to China’s first major overseas investment, the Channar Iron Ore Mine. This was evidence of the mutual trust that had been built up between the governments and commercial enterprises. The Hawke government strongly backed the development of APEC and encouraged China to become a member.

The momentum of this period continued through the 1990s, although there was a setback with the Tiananmen massacre of 1989. The potential of the relationship had previously been a matter of faith but became a reality, not only through trade but also through scientific, cultural and professional relationships. China joined the WTO, subscribing in that and other ways to the rules-based international trading system. Deng’s economic reforms took effect and growth was impressive. In 2023 China accounted for 18 percent of global GDP and was the top trading partner of eight of the ten biggest economies. Australia’s trade with China is nearly one third of our total trade with the world. Both sides benefit from trade and investment as the two economies are highly complementary.

“What could possibly go wrong with such a firm foundation?” one might well ask. The situation has changed dramatically in the last four years and now we have reached a new critical turning point, where decisions have to be made about our future engagement with China and the rest of the world.

Reviewing the experience of recent years, we can see that, naturally, during COVID, there were international security tensions, global trade was affected and supply lines were cut. Governments everywhere were prompted to discuss how to reduce dependency on imports and there was talk of “friendshoring”. In Canberra and elsewhere security organisations took the opportunity of boosting their status and promoted the importance of seeing international relations in security terms. Allan Gyngell and others have warned of the dangers of such an approach.

In 2024, we have come out of the COVID crisis or, at least, found a way to live with the virus. The task for diplomats is surely to rebuild damaged relationships, to establish a new framework for policy development and to find and secure an appropriate place in the world for Australia. Unfortunately, our economic growth as slowed, particularly as compared with our neighbours, and we have lost some momentum in the international arena. Our weaker economy does affect our international standing and our soft power.

The path forward must be defined and clearly signposted. Canberra should restate its commitment to open multilateral trade principles (often referred to as the “rule of law”), especially the WTO. Donald Trump did not favour multilateralism and marginalised the WTO, which has complicated international trade disputes. Now we need to engage both China and the US to rebuild the organisation and find solutions. China and Austraia are active members of the World Bank and the IMF, both pillars of the international rules-based order.

If there are security concerns, these should be clearly spelled out and not hidden behind weasel words such as “national interest” – which was used by the Morrison government to restrict Chinese investments. Of course, all countries need to protect critical national infrastructure, but the extent of this should be set out.

Above all, we need to cooperate with China and other countries on urgent global issues. Environmental issues cannot wait. The G20 is one useful forum, even though last year’s meeting was inconclusive. Cooperation for pandemic prevention and control is obviously essential. The WHO plays a useful role in sharing information and helping poorer countries that lack sophisticate medical facilities and vaccines. China has backed the WTO, whereas Donald Trump worked against it.

Most of the trade barriers between Australia and China that were erected in the past four years have been removed or are under review. Annual leader-level meetings have resumed. Rhetoric has been toned down. These are all positive signs, but there is more to do to ensure that there a healthy relationship can be maintained. Over the past 40 or even 50 years, the bilateral relationship between Australia and China has been enriched and consolidated by people to people exchanges and these will remain an important aspect of relations in the future. They should be nourished and supported and not restricted by overly cautious security measures.

Communication is the key factor that determines the health of any relationship, whether domestic, business, or national. As someone who has been personally and professionally in Australia-China relations, I have proved this time and time again. It is disastrous that the study of Chinese language, culture and history and teaching and research in these areas have plummeted. Few things are more important in determining Australia’s future than its relationship with China.


For more on this topic, P&I recommends:

We must do everything in our power to build a comprehensive new détente between the US and China

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