2022 marks 50 years since formal relations began between Australia and China. But it's an anniversary neither
side seem to be celebrating. We start with the significant worsening of relations
between China and Australia. Beijing is raging a politically charged trade war Down Under. One of China's
government-sponsored scholars describe Australian
foreign policy as being bizarre, immature, belligerent,
juvenile and mindless. Every time now there is a headline with Australia and China relations we almost know immediately
it's going to be bad news. A series of disputes
between the two nations has led China to introduce
crippling trade bans on some of Australia's biggest exports. Almost a dozen Australian commodities are still subject to
official, and in many cases unofficial, sanctions by
the Chinese government, depriving Australian exporters access to billions of
dollars worth of a market. Because Australia is so closely tied to China economically, it means that China has a lot of trade leverage over Australia that it can use if Australia does things
that it doesn't approve of. You can use the word sanction or you can use the word
trade friction for that. But both of those things
refer to the same point, a process of coercion, to try and change Australia's
political settings. This isn't any old diplomatic row. It's about how the West
handles the Chinese government that not only wants to be a major player in this political game, but wants to decide the rules as well. Australia is really the
canary in the coal mine. What happens in Australia
in relation to China over the next decade will be a blueprint for how the rest of the world will handle China in coming years. Much of China's economic
miracle since the 1980s has been driven by industrialization, building roads, buildings,
machinery and factories, all of which require steel. And to make steel, you
need two ingredients: iron ore for the iron content and metallurgical coal to provide the energy in the blast furnace. Australia is the world's preeminent export supplier of both
of those commodities. This was initially the basis for the relationship
starting in the 1980s, but really gathered steam
during the mid 2000s as China's heaviest stage of
industrialization took off. Australia began to experience what was known as the mining boom, and the mining boom was a time of enormous
wealth in Australia. So billions and billions and
billions of dollars of income flowed into the country, and Australia became enormously
rich and comfortable. And that mining boom was
thanks entirely to China. Mineral resources became the foundation of the relationship. But as China's wealth grew, so did its demand for luxury goods. Wine and rock lobster became popular among China's burgeoning
middle and upper classes, which provided Australian exporters even more opportunities
and cemented trade ties. Two-way trade grew from US$86 million in the early years of
our diplomatic relations, to US$136.4 billion in 2013, and China has been Australia's biggest trading partner
for five consecutive years. Australia also developed a number of other export industries, which China was in need of as
its development level rose. Probably the most famous
is international education, where tens, and in some cases, hundreds of thousands of Chinese students came to Australian
universities to study degrees. In 2019, the income raised from Chinese students studying
in Australia was valued at around A$12 billion. That same year, 1.4 million Chinese tourists
spent over $12 billion, contributing to more than
one quarter of Australia's entire international tourism spend. But while trade relations have thrived, politically the two nations
have kept their distance. For most of the last 30 years, the way that that circle has been squared is attempt to keep the two
things in separate discussions. We'll have a discussion
about the political, where we'll be able to disagree
and have disputes at times, whereas on the economic,
we can have a discussion solely about the economic, and where those mutual benefits lie. The challenge we've had
over the last five years is that kind of firewall
between the two sides has become harder and harder to sustain, as many of those political difficulties have become stronger and stronger. Is he on the side of the
agencies that keep us safe, or is he on the side of
a foreign government? In 2017, Australian Labor Senator Sam Dastyari resigned from
parliament after allegations that he'd received money
from Chinese donors affiliated with the
Chinese Communist Party. Shortly after, former Prime
Minister Malcolm Turnbull passed foreign interference laws that targeted cases of espionage and required people acting in the interest of overseas powers to register and disclose their ties. Malcolm Turnbull at the
time, while professing that the legislation was
not targeted at China, said that the Australian
people have now stood up in his introduction for it, which echoed what Mao Zedong said when he started the
Chinese People's Republic. Modern China was founded in 1949 with these words... The Chinese people have stood up. That was considered very insulting, and pretty much laid out exactly who this legislation
was designed to target. A lot of Chinese Australians
in the community, who had connections with China,
whether it be through trade, whether it would be personal
network connections, they felt they were targets of that foreign interference law. 10 years ago or more, those connections were really prized. And these people, those who had connections
with the mainland, whether through business,
personal or political, were really valuable for
Australia-China relations. You know, at the end of 2016, people with those kind of
connections were really seen as vectors of Chinese
Communist Party influence. The Foreign Interference Act came amid mounting concern about China's influence
over Australian politics. What followed were a number
of political disputes that eroded bilateral
relations even further. China's ambassador on the attack, renewing criticism of
Australia's ban on Huawei, preventing the Chinese telco from participating in
Australia's 5G rollout. As I see it, it's basically
political motivated. China says Australia's decision to offer safe haven to Hong Kong residents is a serious violation
of international law. Today, the PM hit back at
China's escalating rhetoric after Beijing said Hong Kong protestors were showing signs of terrorism. China has rejected suggestions it's behind a large-scale
cyber attack on Australia. No one was ever arguing, that there shouldn't be an
independent investigation into the origins of the
virus. But it's curious, why did Canberra have to
take the lead on this? There's been a number of key points along the bilateral timeline where we can sort of pinpoint that spiraling
downward of relationship. And then when Australia called for international investigation into the origins of the coronavirus, that really put China on attention. We will need an independent inquiry that looks at what has occurred here so we can learn the lessons. Many, I guess on the China side, felt like issues which
are difficult to navigate shouldn't be broadcasted by megaphone. They should be addressed
quietly behind doors. Now, that inquiry was ultimately supported and conducted by the World
Health Assembly in that year. But the Chinese government
was extremely upset about Australia's going
forward and going first in terms of that international call. And the result was a
series of trade sanctions applied to nearly a dozen
Australian commodities over the latter part of 2020. In May 2020, an 80% tariff was put on imports of barley, and restrictions were
placed on imports of beef, which had brought in nearly $3 billion for Australian farmers the year before. China announced an investigation into Australian wine imports, claiming that Australia was dumping excess wine on the market. Eventually that led to
tariffs in excess of 200% being put on Australian wine, effectively killing the
trade almost entirely. Some of these Chinese sanctions have been put on in official manner, particularly for barley and wine and coal. But in some other agricultural products, they've used gray-zone tactics. So these aren't official bans, but unofficially these products don't get passed through Chinese customs, and therefore can't be
sold in the country. And it's very hard to be able to get traction on them using
international trade law because you would first have to prove that it's even occurring. Before these recent tariffs were placed on Australia, China purchased around
a third of all exports, worth more than A$150 billion. Now, with restrictions in place, some industries have
fared better than others. Coal provides an illustrative example, as the effect of that sanction was just a musical-chairs arrangement. Different people were
selling to different people, but not really any overall loss for any players in the market. An alternative example would
be for some of the exporters who don't have alternate viable
markets available to them. In most years, China would buy over 90% of Australia's
rock lobster exports. And having that market
shut down overnight, there was not really any
other deep markets in Asia, where you could place
that many rock lobsters. Wine suffered a similar fate as did Australian timber products. So the effects ranged
from mild to negligible, to very catastrophic for other
small industries as well. While China is economically critical for Australia,
the reverse is less true. Some 70% of Australia's
exports are resources for which there are alternative suppliers. However, there's one Australian export, which can equate to up to
10% of the country's GDP, and it remains critical to China. China keeps buying Australian iron ore. Any sign that could change? Well, no, quite frankly, China needs it. China is the world's
largest buyer of iron ore, not just in Asia, but in the world. And Australia for its part is the world's largest
exporter of iron ore, about 80% of which goes to China. So when you have the world's largest buyer and the world's largest
seller in the same region, for both sides, there's not
really any other alternative. At the height of the trade dispute between Australia and China, there were all these questions
about, why doesn't China just get its iron ore from somewhere else? And certainly, they've tried. They've tried to get iron ore from Brazil. They've tried to get iron ore from Africa. But the deposits in Africa
aren't developed enough, and the ones in Brazil
are famously unreliable. China couldn't cut off the
iron-ore trade with Australia. And because of that, China's
coercive trade measures could not be as effective
as they would otherwise be. For all the diplomatic bluster
and the trade coercion, Australia and China
were still held together deep beneath all the noise and the fury by this tight link of iron ore. While the iron-ore sector kept some form of trade ties intact, the diplomatic side of the
relationship broke down. For two years, there were no high level discussions between the countries. Australia said it tried to reach out to its ministerial counterparts in China, and it just wouldn't get a response, which at some levels is frustrating, for instance on trade
relations, on foreign relations. And in some cases it's dangerous, when it comes to things
like defense and military, especially as Australia was still running operations in the South China Sea, and in waters not too far
away from China itself. So effectively for two
years, Australia and China didn't have diplomatic
relations at a high level. And that coincided with the rise of Wolf Warrior
diplomacy in China, which meant that instead of talking, there was a lot of yelling from Beijing directed at Australia. On the other side, however, you then had the Morrison government, who were very much hyping
up the threat from China. They were talking a lot about the drums of war beating in Asia, and comparing the current times to the late 1930s before World War II. That kind of strident rhetoric under the previous government
really didn't sit well with their Chinese
counterparts in Beijing. It didn't give them any sense
of space into navigating those delicate and complex
international issues. But again, I think, you
know, China has some blame to bear in the state
of bilateral relations. Its issuing of those 14 grievances really puts Australia in a difficult spot. One piece of paper, 14 points, a diplomatic shot from
Beijing at Canberra, that's been heard around the world. In November 2020, a list was leaked to the Australian media, allegedly from the Chinese government, containing 14 grievances that
would need to be addressed before a trading
relationship could resume. The list included restricting free media and preventing parliamentarians from speaking out against China. The problem with the 14 grievances is that they put Australia and China
in a very difficult position. Because Australia couldn't do any of them, because if it did them, it would be seen as giving
up a lot of its democracy and its free speech to appease China. And China couldn't give up on them, because they presented them to
Australia in the first place. It ends up being a bit of a hole, which neither side could
dig themselves out of. The Chinese ambassador to Australia has since said the 14
points were misinterpreted. Eventually, the concerns were being reported in a twisted way as the so-called
preconditions, as demands. This is not true, that's not true. Heightened political rhetoric was amplified on both sides. The result was a polarization
of public opinion and communities caught in the crossfire. The consequence of that not being specific and not being targeted in talking about, you know, what aspects
of China are we talking? Are we talking about the government? Are we talking about the Communist Party? Chinese Australians got caught in that middle of that
change and that reassessment. What happens in that
sort of looking top down is you miss the granular
and the more complex issues, that arise from community
and social side of things. And that is discrimination
and racism being perpetrated because of the state
of bilateral relations. And I think the first and second year of the Being Chinese in Australia survey really showed one of that consequences. And that was high rates of discrimination and threats to Chinese
Australians' physical safety. Since Anthony Albanese's Labor Party won a national election in May 2022, leaders from both countries have signaled that they want to ease the
tensions of recent years. Since Albanese actually came to power, we've seen a far more subtle shift in how his government is handling the relationship with China. They seem to be doing two things at once. So on one hand, they are
maintaining that line. They are speaking up on human rights. On the other hand, they are very carefully exploring how they can improve relations
with the Chinese government. We've seen the first
high-level diplomatic contact between Australia and China in years. But mending relations has not been without its challenges. A new security deal signed between the Solomon Islands
and China in April 2022 has officials worried that it could pave the way for a Chinese
naval base in the Pacific. It also raised concerns
beyond just the APAC region. It was a shockwave to
the US and Australia, and it meant that they then
rushed back out to the Pacific to try and repair relations that they, I guess, hadn't really known were broken in the first place. And so now the Pacific has become an incredibly important part of the global strategic contest
between the US and China. The regional dynamics have shifted. China has indicated
its strategic ambitions in the Indo-Pacific. And that really complicates a lot of things for the
Australia-China relations. I would suspect that you can
have cordial trade relations but disagree on a lot of
other international issues, whether it be security
in the Indo-Pacific. But I guess it all
comes back to, you know, where can the two countries find common points of agreement
and work on those? And can the two countries agree to disagree on various issues? What we've seen recently
is the greatest power shift in modern history across the
Pacific, from the US to China. We no longer have the comfort of the world that's dominated by the US, with whose values and political
system we largely share. Australia's often described as being on the front lines of
the international debate over how to handle the rise of China. The question is whether or not Australia can have a trade relationship
with China again, but a strategic relationship that's far more focused on the US. Can Australia want different
things for the region that maybe go against what China wants and still live peacefully
and co-exist with China? These are the questions
that are going to be asked for years to come.
