Will souring China-Australia relations force a rethink on trade?

An employee works as Australian-made wine (on display shelves on R) are seen for sale at a store in Beijing on August 18, 2020.
An employee works as Australian-made wine (on display shelves on R) are seen for sale at a store in Beijing on August 18, 2020. AFP - NOEL CELIS

Relations between China and Australia continued to decline on Tuesday after the hasty departure of the last remaining Australian journalists in China. The move comes in the wake of Beijing’s imposition of trade sanctions against Australian goods, which could trigger a rethink of Australia’s decades-long economic reliance on China.

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The two journalists – Bill Birtles of the Australian Broadcasting Corporation (ABC) and Michael Smith of the Australian Financial Review (AFR) – arrived in Sydney on Tuesday. The Australian government had warned the journalists to leave as tensions escalated over another Australian citizen, television anchor Cheng Lei, who is being detained on allegations of endangering national security.  

The two men had been kept from leaving China until they were questioned about Cheng, AFR said in a statement, adding they were told they were "persons of interest" in an investigation into their colleague. Australian diplomats negotiated their departure

It is the first time since the normalisation of relations between Australia and China in the early 1970s that there are no Australian journalists in China.

The ban on the Australian journalists is part of a wider China crackdown on Western journalists, with more than a dozen US journalists from the New York Times, Wall Street Journal and Washington Post also having been targeted.

For Australia, however, the ramifications run particularly deep and reflect an unravelling of ties with its top trading partner.

"It felt very, very political. It very much felt like a diplomatic tussle in the broader Australia-China relationship," Birtles told ABC television on Tuesday.

Professor Steve Tsang, director of the SOAS China Institute at the University of London, told FRANCE 24 that the Australian government will likely become more cautious and conditional in its engagement with China going forward.

“The Australian government would be seeing that China has not been the benevolent friend it perhaps thought it was,” Tsang said. 

Trade dollars at stake

China is Australia’s largest trading partner – in June 2020, Australia’s exports to China reached a record A$14.6 billion (almost €9 billion) and accounted for 49 percent of Australia’s total exported goods.

This year’s record was reached despite sanctions Beijing imposed on Australian beef, barley and coal, and anti-dumping tariffs of more than 200 percent on wine. The trade barriers were thought to be retaliatory after Australian Prime Minister Scott Morrison called on world leaders in April to back an independent inquiry into China’s handling of the Covid-19 outbreak. Beijing said the move by Australia was “politically motivated”.

Dr Pak K Lee, a senior lecturer at Kent University specialising in Chinese politics and international relations, said the call was a major turning point in Australia’s relations with China.

“Whether wrongly or not, China believes that Australia was doing the US’s bidding,” Dr Lee said. “But Australia itself has mounting concerns over China’s external behaviour in the South China Sea and over alleged China’s political intervention in its domestic politics via Chinese diasporas.”

Australia has refrained from a tit-for-tat response even as China continues to pile on trade sanctions.

But Australia is treading cautiously as it “does not have many other viable options for its commodity exports and cannot readily find customers other than Chinese importers”, Dr Lee says.

Within Australia, the debate has become highly divisive. In one camp are those advocating for closer ties with China who are worried about the economic fallout for Australia. On the other are those citing Beijing’s pursuit of self-interest and the dangers of becoming too economically dependent on Chinese trade.  

Professor Tsang said there are risks for any country that relies on trading predominantly with one partner – and particularly in the absence of shared democratic values.

“There’s a risk for any country that is heavily trading with one partner and where the country’s values aren’t shared,” he said.

Tsang also noted that China’s newly assertive style of statecraft – named after a popular action film – had also increased feelings of competition.

“Unless Australia or any other country accepts China’s ‘Wolf Warrior’ approach to diplomacy, there are going to be certain elements of tension,” he said. 

“China will not be satisfied unless Australia accepts playing second fiddle to the Chinese.”

Strained relations

The friendship enjoyed between Australia and China had begun to unravel even before the pandemic.

China’s attempts to suppress pro-democracy protests in Hong Kong in 2019 led to street clashes in Sydney and Melbourne between students from mainland China and those from Hong Kong. In expressing concerns to China over its response to the Hong Kong pro-democracy movement, Australia risked hurting one of its biggest export earners – foreign students at Australian universities, where 200,000 Chinese students and nearly 12,000 from Hong Kong are enrolled.

China’s image internationally may remain tarnished for some time, not least among ordinary Australians. 

In a Lowy Institute poll – “Understanding Australian Attitudes to the World” – taken before the Australian government’s push for an inquiry into the origins of Covid-19, perceptions of China had already undergone “unprecedented shifts”.

More than nine in 10 Australians said they favoured the government working to find other markets to reduce economic dependence on China.

The poll concluded that “trust in China was at its lowest point in the [16-year] history of the poll, with 23% saying they trust China a great deal or somewhat ‘to act responsibly in the world”.

While the fractures in diplomacy are raising concerns of the future stability of the decades-long, mutually prosperous economic relationship, they are also exposing uncomfortable truths about the wisdom of Australia’s failure to diversify its trade partnerships.

“Australia will have to work more closely with its allies – the UK, US and the EU – to take a coordinated approach with China and not just see it in bilateral terms,” Professor Tsang said.

 

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