Rebuilding Ties: Australia and China's Diplomatic Turnaround

Rebuilding Ties: Australia and China's Diplomatic Turnaround

Australia-China relations are now much more stable than a year ago.

The recent thaw in relations between Australia and China may not come as a surprise to those who have been closely monitoring the two nations' interactions. Some had speculated that a change in Australia's policy toward China would occur under the leadership of Labor Party leader Anthony Albanese, who succeeded Scott Morrison as prime minister and is known for his more flexible approach to China. However, the shift in Australia-China relations over the past year cannot be attributed solely to a change in leadership.

The Early Policy Shift

For over a decade, leaders from Australia's Labor Party have generally adopted a more flexible approach towards China, recognizing the importance of engagement for the nation's interests in areas such as trade, national security, and climate change. This approach has appeared in the foreign policies of former Labor leaders Kevin Rudd and Julia Gillard, and Albanese is no exception. Upon assuming office, one of Albanese's top priorities was to reshape Australia's policy towards China, moving away from Morrison's hawkish stance.

Despite his strong position on national security and human rights issues, Albanese's government has adopted a more flexible approach in its dealings with China, seeking dialogue to rekindle bilateral cooperation on key issues. This change in foreign policy has made the revival of Australia-China relations more feasible than under the previous leadership. China, too, has played a role in the turnaround of relations. In January 2022, China appointed Xiao Qian, a former ambassador to Indonesia known for his professional communication style and moderate tone, as its new ambassador to Australia. The move of sending a “non-wolf-warrior” diplomat was seen as a signal of China's willingness to repair relations with Australia and modify its aggressive diplomatic approach. Since Xiao took office, he has been vocal about restoring Australia-China relations. For example, in an event held at the University of Technology Sydney’s Australia-China Relations Institute, Xiao stated, “These are the areas where we should continue to conduct constructive dialogue, to minimize the differences if possible, and to enlarge our common grounds if possible.”

In addition, the congratulatory message sent by Chinese premier Li Keqiang to Albanese after the election was another significant indication of China's desire to improve relations. In his statement, Li said that “China stands ready to work with Australia to learn from the past, look to the future and push forward the sound and stable development of a bilateral comprehensive strategic partnership by adhering to the principles of mutual respect and win-win results.” This message, along with previous statements from China's top diplomat in Australia, signaled a new tone in China's policy towards Australia and created a favorable condition for the Albanese government's future efforts to repair relations with China.

The policy change on both sides engendered a more favorable environment for engagement, particularly in the latter half of 2022 and early 2023, laying the groundwork for a potential improvement of Australia-China relations.

Unfreezing Diplomatic Engagement

With a more conducive atmosphere for engagement, Australia and China began to boost their high-level diplomatic interactions. In June 2022, Australian defense minister Richard Marles met his Chinese counterpart, Wei Fenghe, on the sidelines of the Shangri-La Dialogue in Singapore. This marked the first high-level contact between the two nations in three years, signaling improved relations between Australia and China.

At the time, few believed that such engagement meant significant progress had been made in Australia-China relations, as several core disagreements on security, trade, and human rights remained unresolved. Yet, as it was the first high-level contact between the two countries in three years and came just three weeks after the inauguration of the Albanese government, it signaled meaningful progress in unfreezing bilateral relations, especially in light of the ongoing geopolitical competition in the Indo-Pacific region as well as the disputes between the two countries. This swift diplomatic arrangement also demonstrated a shared willingness to restart diplomatic dialogue.

Although there are still contentious disagreements between Australia and China, Canberra’s largest trade partner, efforts to improve relations have continued. Following a defense ministerial meeting in Singapore, Albanese aimed to seize the momentum to further thaw ties. In an interview with ABC News, Albanese emphasized the importance of dialogue with China. "Common sense tells us that, despite our differences, we need to maintain open lines of communication with our largest trading partner. I look forward to continued engagement between ministers of our respective governments,” said Albanese.

Albanese's positive message was later echoed by a top Chinese diplomat. In July 2022, Australian foreign minister Penny Wong met with her Chinese counterpart, Wang Yi, on the sidelines of the G20 foreign ministerial meeting in Indonesia. This marked the first meeting of the two countries' foreign ministers since 2019. During the meeting, Wang said, “China is ready to re-examine, re-calibrate, and reinvigorate bilateral ties in the spirit of mutual respect and work towards restoring relations to a positive trajectory.” This sentiment was further echoed in November 2022 when Wang Yi had a positive exchange on a phone call with Wong ahead of multiple international events. It is highly likely that the call was to ensure a positive diplomatic atmosphere ahead of the Albanese-Xi meeting at the G20 leaders’ summit.

The following week, Australia-China relations achieved a major diplomatic breakthrough. Chinese premier Li and Albanese met on the sidelines of the ASEAN summit in Cambodia, marking the highest-level dialogue between the two nations before the upcoming leaders’ meeting. More critically, Chinese President Xi Jinping met with Albanese on the sideline of the G20 summit a few days after Li’s meeting with Albanese, marking the first leader-level dialogue between the two countries in three years. Not only did the meeting signify the stabilization of Australia-China relations, but it also set a positive trajectory for future developments.

Indeed, diplomatic engagement between Australia and China became more frequent in the months following the Albanese-Xi meeting. The second defense ministerial meeting of the year took place ahead of the ASEAN defense ministers meeting in Cambodia, shortly after the Albanese-Xi meeting. About a month after the Alabnese-Xi meeting, Wong's visit to Beijing marked a crucial step forward for Australia-China relations, as it led to the resumption of the Foreign and Strategic Dialogue, which had been suspended in 2018. The joint statement of the dialogue affirmed that "the two sides agreed to maintain high-level engagement and to commence or restart dialogue" in areas ranging from trade to climate change, signaling a renewed commitment to bilateral cooperation.

After Wong's visit to Beijing, further signs of improvement in Australia-China relations began to emerge. In January 2023, Assistant Trade Minister Tim Ayres met with China's vice minister of commerce, Wang Shouwen, on the sidelines of the World Economic Forum in Davos, where they agreed to hold a virtual meeting of top trade officials in the coming weeks. This development is particularly significant, as trade has been a major source of contention in bilateral relations in recent years. Additionally, the public health agencies of the two countries also held a virtual dialogue in advance of the meeting of trade officials in Davos. This sequence of events may indicate that China-Australia relations are on a path toward a new era.

Disparate Strategic Considerations

For Australia, one of the main motives for improving ties with China is resolving trade disputes to revamp the Australian economy. Such trade disputes have cost billions of dollars in losses across a range of Australian industries, including wine, coal, lobster, and beef. Rather than taking the subject matter to the inefficient international trade framework, Albanese has preferred to address this issue bilaterally. He has vowed to eliminate trade impediments to Australian products and is willing to fix trade ties with China.

Despite the Albanese government’s requests for tariffs to be removed, progress on this front was slow until July 2022, when there were discussions on ending the ban on coal exports to China. This development, along with others, suggested that Albanese's diplomatic approach was bearing fruit. For example, bans on Australian products such as coal have gradually been removed in recent months, and tariffs on other Australian products are also expected to be removed. Additionally, a trade minister meeting is scheduled to take place in the coming weeks, providing a chance for both sides to engage in trade-related issues.

Aside from trade, a stabilized relationship with China provides opportunities for the Albanese government to refine cooperation with China on the key areas of education, tourism, and climate change. In the field of education, for example, China’s large population can provide Australia with massive numbers of talent and funds. The number of Chinese students in Australian higher education has decreased for two years in a row. Yet the stable relationship between the two nations with the easing pandemic restrictions of both countries is expected to attract many Chinese students this year. Similarly, improving Australia-China relations can boost Australia's economy by attracting more Chinese tourists this year.

Perhaps most importantly, a positive relationship with China, coupled with regular dialogue, can help manage competition between the two nations and ensure that it does not escalate into unnecessary conflict. The defense minister meeting in Singapore in June 2022 proved this point. The meeting allowed both sides to frankly discuss pressing issues, such as the dangerous interception of an Australian aircraft by a Chinese fighter jet. This could lower the risk of misjudgments in critical times, preventing conflicts from occurring.