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Is Australia Going Soft on China?

Australia’s Labor Party has sought “stabilization” with China, which might not be such a bad thing.

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Credit: Getty Images

Has the left-leaning Australian government gone soft on China? In May 2022, just after his inauguration as prime minister, longtime member of parliament Anthony Albanese immediately flew to a summit of the Quadrilateral Security Dialogue, which includes India, Japan, and the U.S. as well as Australia. Proponents say the group is upholding freedom of navigation and secure supply chains in the Indo-Pacific. Critics call a thin façade for containment of China. Analysts at the time were quick to note the continuities between his government and that of his center-right predecessor, Scott Morrison, at least on foreign affairs.

By November 2023, however, Albanese was meeting Chinese Communist Party General Secretary Xi Jinping in Sydney. The Australian prime minister called the discussion “positive” and invited the Chinese leader to visit the capital of Canberra. At a time when many countries have expressed concerns about CCP behavior, yet fear acting on those concerns due to China’s economic influence, Albanese’s meetings with and statements about China’s leadership have led to concerns that the bedrock alliance between the U.S. and Australia may not be as firm as hoped and Albanese will not be a partner for reining in Beijing’s regional ambitions.

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Conversations with leading experts on Australian security paint a different picture—one driven by change in Beijing as much as in Canberra.

It must be noted that of all the post–World War II U.S. alliances in Asia and the Pacific—the Philippines, South Korea, Japan, Thailand, New Zealand, and Australia—the relationship with Canberra has had perhaps the least drama. There have been few, if any, incidents when the value of the alliance has been questioned, popular uprisings against the American presence in Australia, or sharp divergences in the approach to the security questions of the day. Some of the other alliances, South Korea and the Philippines, for instance, have in recent years come close to serious confrontation, if not a break.

This is not to say that there have been no divergences at all in the U.S.-Australia union. There had been signs going back decades that the Chinese market presented enormous opportunities for Australian exporters and China’s foreign direct investment in Australia presented both opportunities and potential challenges. By the middle of the last decade, there were questions about whether Australia’s economic dependence on China would conflict with its reliance on the U.S. for security. In the early days of the Trump administration, the right-of-center government of Malcolm Turnbull introduced laws to prevent foreign interference in the country’s public affairs while also drawing closer to the U.S. through mechanisms such as the Quad. Nonetheless, Turnbull also supported stable relations with China and finalized the China-Australia Free Trade Agreement in December 2015. Notably, the text of his foreign interference laws singled out no countries in particular, though everyone at the time knew what they referred to.

Under the surface, Australia’s concerns about its relationship with China were mounting due to foreign interference. Australia watched warily as the PRC staked greater and greater claims to the South China Sea in defiance of existing international law and its smaller neighbors’ wishes, cracked down on Hong Kong’s autonomy, and bid for a role in constructing Australia’s 5G network (a move the government refused as far back as 2010 and banned outright in 2018). Still, with China as Australia’s most important trading destination—including for iron ore, liquefied natural gas, coal, gold, and agricultural products—and the free trade agreement offering Australia precious access to the PRC domestic market, the confrontations were limited in scale and scope.

The tension between these competing dependencies reached an apparent resolution in 2020. In 2018, Scott Morrison unseated Turnbull as leader of the Liberal Party and thus prime minister, and in 2020 it was Morrison’s government that demanded an international inquiry into the origins of the Covid-19 pandemic. It was also Morrison who in 2021 broke with the Turnbull government to institute the AUKUS pact with Britain and the U.S., reneging on his predecessor’s agreement to receive French-designed submarines in what would have been the largest defense acquisition in the country’s history. Instead, Morrison chose to source nuclear-powered vessels that the U.S. and Britain would assist them in acquiring, a decision that not only China but Turnbull condemned.

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Despite the steps taken by Morrison, the real reason for the deterioration of relations between Australia and China is the decisions made by Beijing. The PRC could have reacted in any number of ways to Morrison’s request for a Covid inquiry, including ignoring it, but it chose to sanction Australia, placing a range of restrictions on Australian goods from timber to lobster to wine. The PRC had already, by this point, established a reputation for throwing its economic weight around, sanctioning South Korea in 2016–17 for accepting a U.S.-made missile defense system's installation in its territory and withholding rare earth mineral exports from Japan in 2010 over a territorial dispute. In 2020, Beijing engaged in other escalatory actions, including escalating a border dispute with India that resulted in an armed clash and taking an increasingly hostile public approach to criticism known as “Wolf Warrior” diplomacy. 

Beijing probably had its reasons for these actions. Perhaps they sought to distract its citizenry from their bungled handling of the virus by cultivating a sense that the country was under siege internationally and would fight back. Still, such moves caused bilateral relations with several countries to deteriorate. Japan, South Korea, the Philippines, and India all shifted decisively against Beijing. Few shifted as fast and as hard as Australia.

Canberra refused to give in to Chinese trade pressures. Within months it sought to normalize meetings of the Quad, and by 2021 it had entered the AUKUS pact. Beijing responded to this development especially harshly, with its state media stating that, in the event of war, Australians would be among the first to die. Australia continued to draw closer to the U.S. and its partners. It declined to make concessions to Beijing for the sake of trade and even sought to address its supply chain weaknesses through participation in the Quad and the Indo-Pacific Economic Framework (IPEF).

Then, in spring 2022, Scott Morrison and his party were unceremoniously dumped from power by a resurgent Labor Party. This brought about a new approach to the PRC and the U.S.—but how new?

The Labor Party’s rise to governance after nine years out of power was driven by several factors, most of which pertained to domestic policy rather than foreign. Many lost Liberal seats were not claimed by Labor Party members but rather “teal independents” who supported new climate, socially progressive, and election integrity policies.

Nonetheless, the shift in seats brought new faces to power, including Albanese, whose tenure as a member of parliament had included regular criticisms of U.S. foreign policy, including the Iraq War and its stance on Israel and Palestine. It also returned some familiar faces. Since last spring, the ambassador to the U.S. has been former Prime Minister Kevin Rudd, a fluent Mandarin speaker who in 2008 nixed the original version of the Quad over Chinese objections.

Albanese, upon his inauguration, vowed that the country would not back out of AUKUS or the Quad and would not seek to distance itself from U.S. foreign policy in general. The U.S. remains broadly popular among the Australian public; China, not so much.

Nearly two years into Labor Party rule, however, there have been reasons to be skeptical of Australia’s commitment, if not to the alliance, then to deterring China. Albanese’s meetings with Chairman Xi, particularly in November, saw both sides speak of the need for stabilized relations. In 2023, China began rolling back trade restrictions it once imposed on barley and coal and said it would review its onerous 218 percent tariff on Australian wine. This prompted a range of responses, from credit to the diplomacy of Albanese and his foreign minister, Penny Wong, to concerns that Canberra made unjustifiable concessions to Beijing in exchange for a break for its exporters.

For Graeme Dobell of the Australian Strategic Policy Institute, those who seize on the Albanese government’s differences from Morrison are missing the extent of its continuity. He calls it “slightly different tone but temperature very much the same.”

He also asserts that, rather than seeing Canberra as having gone wobbly, observers should note that Australia effectively conceded nothing to Beijing in exchange for better treatment. What actually happened, he says, is Beijing saw the departure of Morrison as an opportunity to abandon trade restrictions that had completely failed to serve their purpose. By the beginning of 2021, China was suffering from severe power cuts in many cities due to the loss of Australian coal, while the overall value of Australia’s exports climbed in the three years after 2019 due to a surge in the prices of Australian ore, the absence of which would sink China’s steel industry.

“It was China that imposed the pain,” Dobell said. “It was China that said it was going to use its trade muscle to bring us to heel.”

“It was obviously not working, and China’s decided to back off on that.”

John Quiggin, an economics professor at the University of Queensland, said the spat revealed that Australia was not “really dependent” on China after all. “If [the Chinese market] closes, we can sell somewhere else, the Chinese buy somewhere else, and prices don’t change very much, though the arrangements are less efficient.” Indeed, studies have shown that after China’s restrictions were instituted, Australia’s other Asian partners, including Japan and Korea, stepped up.

Economics is not the only reason for the change. Sourabh Gupta of the Institute for China-America Studies in Washington connected Beijing’s recent steps toward Australia with similar actions toward the Biden administration in Washington, which in 2023 also included summitry and a push for more stable relations.

“China’s kind of, in a sense, given up on the conservative parties in the Five Eyes countries,” Gupta said, referring to members of the intelligence-sharing pact including Australia, the U.S., Canada, New Zealand, and the UK. “But it still sees opportunities for relations with the center-left parties.”

The U.K. has indeed been more hawkish toward the PRC under the Tories. New Zealand, which only recently turned right, has generally stayed out of the disputes between the U.S. and China. The one exception, Gupta said, would be Canada, where the center-left government of Justin Trudeau has had consistently fraught relations with the PRC, complete with tit-for-tat incarcerations of the other’s nationals. Bilateral ties could, if anything, improve following a change of government.

The metaphor consistently encountered in discussions with experts on this subject was that of “building a floor” beneath the relationship to keep it from deteriorating into something worse than a rivalry. “China’s under no illusions that it can have good relations with any of these countries,” Gupta said.

Quiggin has suggested in writing that much of the original dispute was prompted by the Morrison government’s call for a Covid inquiry, something it should have known would not have a high chance of success and would likely strain ties with China. The “change of personnel” brought on by Albanese’s ascent, more so than Albanese himself, probably instituted closer ties, and this would have likely happened even had Morrison been replaced by his own deputy party leader, Josh Frydenberg.

For James Curran, professor of history at the University of Sydney and international editor of the Australian Financial Review, the goal of Albanese’s government has been “stabilization.” In addition to the lifting of trade restrictions, this has brought about regular dialogues and the October 2023 release of Chinese-born Australian TV reporter Cheng Lei following her 2020 detention on nebulous national security charges.

“But in essence the Albanese government retains the core strategic judgment of its predecessor, namely that China’s military build-up is the most dramatic change in the region’s strategic circumstances since the Second World War, and therefore Australia must be seen to be doing all it can with the US and other allies in pushing back against the flexing of China’s military muscle,” Curran said.

Experts on Australia’s security policy also seem broadly in agreement that the Morrison government did much of the heavy lifting, particularly on AUKUS, a deal that, now in place, is unlikely to be undone. However, not all were in agreement as to how closely aligned the U.S. and Australia would be in future contingencies.

“I can’t think of anything the U.S. could ask, going up to or beyond Taiwan, that the Australia would not [support],” said Dobell. For Gupta, in the post-9/11 world, the Australian national security establishment emphasized self-reliance and making the U.S. alliance secondary to that, but this has been reversed since 2016 with a new emphasis on integrating with partners, the U.S. especially.

“Australia’s focus is regional, forward defense—and tightly linked with the U.S.,” he said. “There’s a consensus on that.”

Quiggin, however, cites polling data that suggests Australians still want to balance their security partnership with the U.S. with an economic relationship with China. “I’d go a bit further and say most Australians would prefer that our security alliance with the U.S. should not involve us in conflict with China,” he said.

Curran echoes questions about the Australian public’s willingness to fight abroad in U.S.-led missions, noting its refusal to dispatch a warship to deal with the attacks by the Houthis in Yemen on commercial vessels in the Red Sea. “That didn’t raise too many eyebrows in Washington, but it certainly stirred up a strong domestic reaction here, mostly from hawkish commentators used to Canberra giving a kneejerk response of yes to any U.S. request,” Curran said. “The government is adamant that it must focus on priorities in Asia.”

One potential wrinkle that may complicate Australia’s straddling act is Taiwan. The CCP, as is well known, eyes the democratically governed island across the strait ravenously for reasons both symbolic (it would decisively end the division that began with the Chinese Civil War, in the CCP’s favor) and practical (it would enable the People’s Liberation Power to project power abroad, finishing the process that began with its official base in Djibouti and its apparent one in Cambodia).

Benjamin Herscovitch, research fellow at the Australian National University, notes that one of the largely unspoken implications of AUKUS and its provision of nuclear-powered submarines is that this would enable Australia to intervene in military conflicts farther from its shores—including in the strait. He also notes that, for Australian national security officials, the narrative on Taiwan has been evolving from an unwillingness to even think about a Taiwan contingency to, under Morrison, declaring that U.S. involvement in a cross-strait war would inevitably involve Australia. Under Albanese, the focus has again shifted, to “doing much more now to make sure [an invasion or blockade of Taiwan] does not happen … to signal to Beijing that the costs are way too high,” Herscovitch said.

One way that might be accomplished, which would not involve a promise to defend Taiwan militarily, is to exploit China’s continued reliance on Australia for its resources, specifically the aforementioned iron ore. China needs ore for its domestic industry, but Australia is so reliant on the trade in ore that Herscovitch terms such threats as “economic MAD” (mutually assured destruction). “That would help potentially buttress security,” he said, adding that the increased U.S. force posture in Australia has already made a significant difference in the balance of hard power in the region.

One thing the Albanese government could also do is increase interaction with Taiwan, much as the U.S. and Japan have. Australia used to have regular visits by ministers and junior ministers to Taiwan, but these have not taken place—officially, at least—since 2012. Australia also relented to PRC pressure under Turnbull not to pursue a free trade agreement with Taiwan, and subsequent governments have not taken up this cause, even though Taiwan is already one of Australia’s biggest trading partners.

“They’re trying to straddle two fences,” Herscovitch said. “Not see the political relationship nosedive again, while having a fulsome relationship with Taiwan. Maintain and expand ties with Taiwan without tanking relations with China.”

This would seem to preclude closer security and defense ties with Taiwan, but Herscovitch noted that “some officials will say with a wry smile ‘a lot of things happen behind the scenes that are not telegraphed.’ There are things that may be happening that we are not privy to, and which the government may not want us to be privy to.”

“Stabilization” in and of itself might not be a negative development. In the U.S., even the Trump administration, which treated China more as an adversary to be countered than a partner to be nurtured, reached a “phase 1” trade deal with China near the end of Trump’s first term. Nevertheless, it did not take long for observers to declare that China had not complied with its part of the deal, especially in purchasing more U.S.-made goods. Gupta notes that, for China, it is not enough to secure a regular supply of needed resources; it must have a controlling interest in their acquisition. Canberra has been resistant to this urge, but that does not mean Beijing has given up.

For its part, Beijing certainly has not given up on claiming Taiwan. “Reunification” would be an inaccurate label for this development, as Taiwan has never been under Communist China’s administration, but that does not make the CCP any less determined to take the island, which would have symbolic and cold strategic value.

Some may be assured to hear that Australia, beneath the public thaw with Beijing, still eyes it warily and is still taking steps to counter its influence. But should the thaw persist, and the CCP not make the unforced errors associated with its “Wolf Warrior” phase, such wariness could give way to complacency.

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