Australia seeks reset with Xi Jinping while balancing ties with US

Australia’s prime minister Anthony Albanese embarks on a state visit to China this weekend that will underline a dramatic turnaround in relations between the countries, which had rapidly deteriorated in recent years over issues ranging from trade to security.

Ties had reached a 50-year nadir, with Beijing imposing tariffs and sanctions on Australian goods and detaining Australian citizens, while officials in Canberra called for investigations into Chinese political influence and the origins of the Covid-19 pandemic.

The Labor prime minister’s state visit marks the culmination of a recent rapprochement, driven by business weariness with trade tensions and a desire to depart from his predecessor’s more hostile stance.

But Albanese faces the challenge of continuing to repair relations with Australia’s largest trading partner even as his administration forges closer security ties with the US to counter Beijing’s influence in the region.

Richard Maude, senior fellow at the Asia Society Policy Institute, said the rapid thaw represented a surprising reversal from the “very, very deep lows of a few years ago” but would not undermine Australia’s co-operation with the US. “There is no shift in Australia’s position on Indo-Pacific security and its role in creating a balance of power,” he said.

Albanese’s China trip, the first for an Australian prime minister since Malcolm Turnbull’s in 2016, comes on the heels of a visit to Washington last month. In a speech to top US officials, Albanese said Australia needed to be “clear-eyed” about its relationship with China, highlighting his government’s “patient, calibrated and deliberate” approach.

His task will be to maintain that balance even as the Biden administration continues to increase pressure on China, imposing export controls on next-generation semiconductor equipment and strengthening security co-operation in Asia through alliances such as Aukus, which aims to give Canberra access to nuclear-powered submarines.

US president Joe Biden, left, shares a toast with Australia’s prime minister Anthony Albanese during a state dinner in Washington last month © Yuri Gripas/Abaca/Bloomberg

Albanese — who has been dubbed “Airbus Albo” by local media for his globetrotting schedule — begins a three-day state visit with a trade show in Shanghai on Saturday. He is then set to meet China’s president Xi Jinping and premier Li Qiang on Monday.

Such an audience was nearly unthinkable just a few years ago. Frictions have been rising since Canberra publicly opposed Beijing’s claims over the South China Sea, banned Chinese telecoms equipment maker Huawei from its 5G network and raised concerns over China’s influence in domestic politics.

Scott Morrison, Albanese’s conservative predecessor, called for a “weapons inspection”-style independent inquiry into the outbreak of Covid-19 in Wuhan, triggering a furious backlash from Beijing.

China retaliated by targeting Australia’s economy, imposing trade sanctions and tariffs on about A$20bn ($13bn) worth of goods including wine, coal, lobsters and barley, though Canberra diverted some shipments to other markets, expanding the country’s trade balance.

Military incidents between Chinese and Australian forces, which Canberra has decried as acts of intimidation, have also occurred more regularly.

Morrison warned of an “arc of autocracy” in reference to China’s role as a global superpower but has since said his strategy was to resist, rather than provoke, Beijing.

Pickers harvest Shiraz grapes in Eden Valley, South Australia
Pickers harvest Shiraz grapes in Eden Valley, South Australia. China has opened a review of its punitive tariffs on Australian wine, which were imposed in 2020 © Carla Gottgens/Bloomberg

Following Albanese’s election in May 2022, his administration has pursued a more balanced tone, taking a firm line against hostile behaviour but refraining from critical rhetoric, recognising that Australia is still reliant on China for more than one in every four of its export dollars.

Albanese met Xi on the sidelines of the G20 summit in Indonesia in November last year, while Penny Wong, Australia’s foreign minister, met her counterpart Wang Yi in Beijing a month later.

The bridge-building has paid dividends, with Beijing considering unwinding economic sanctions on wine and accepting coal shipments, though some analysts argue that the economic coercion failed to achieve its aims, with Australia finding alternative markets.

China last month also released Australian journalist Cheng Lei, who had been in detention for more than three years.

Canberra, for its part, has opted against revoking a lease held by a Chinese company on the northern port of Darwin after a national security review and is set to remove anti-dumping measures on the import of Chinese wind turbines, a move welcomed by Beijing.

Xiao Qian, China’s ambassador to Australia, said at an Asia Society event in Melbourne last month that he hoped the two countries could enter an era of mutual understanding. “China regards Australia as a friend. There is no reason for Australia to see China as a threat,” he said.

Few observers expect the trip to generate meaningful bilateral developments, though announcements are possible on co-operation in areas such as green energy and climate change alongside a commitment to increasing trade.

“Working with China has become much more difficult for western countries,” said Maude. After years of discord, China and Australia lacked “an active or deep agenda to work together in areas where there might be mutual benefit”.

Australia’s closer military engagement with the US may also overshadow the symbolism of the trip, which will coincide with the 50-year anniversary of Gough Whitlam’s 1973 visit to China, the first by an Australian prime minister and a moment celebrated by both sides.

Canberra this year announced an overhaul of its military posture in direct response to China’s build-up in the region, while the Aukus trilateral defence partnership with the US and UK seeks to strengthen the allies’ deterrence in the Pacific.

Euan Graham, a senior analyst at the Australian Strategic Policy Institute, said Albanese needed to avoid the “foreign policy trap” of prioritising the improved health of the relationship over national interest and alliances in the region. “It is a bit of a national weakness that Australia can easily flip from principle to pragmatism,” he said.

Albanese stressed that he would broach the South China Sea and human rights issues, telling national broadcaster ABC that Beijing “[knows] where we stand”. He said on Wednesday that he would also raise the case of Yang Hengjun, the Chinese-Australian writer who has been imprisoned in China since 2019.

“The Chinese will be smiling through gritted teeth,” said Richard McGregor, senior fellow for east Asia at the Lowy Institute think-tank. But he added that the very fact of the visit was a positive signal. “The medium is the message,” he said. “The trip itself is symbolic of the two sides having a firmer foundation.”

A recent history of Sino-Australian ties

June 2017

Malcolm Turnbull, then Australia’s prime minister, warns of China’s ‘coercive’ power and tension in the South China Sea in a speech at the Shangri-La Dialogue security summit in Singapore

August 2018

Australia bans Huawei equipment from being used in the rollout of 5G networks, pre-empting similar decisions in the US and UK

April 2020

Prime Minister Scott Morrison calls for an independent inquiry into the origins of Covid-19, angering Chinese officials

November 2020

China places sanctions, tariffs and informal bans on a range of Australian goods including lobsters, coal, cotton, barley, timber and wine

September 2021

Australia signs the Aukus alliance with the US and UK to provide the Pacific country with nuclear-powered submarines and curtail China’s military might in the region

February 2022

Australia accuses the Chinese military of unprovoked intimidation after a surveillance plane in the Arafura Sea is targeted with a laser

May 2022

Anthony Albanese wins a federal election and says he wants to improve relations with China while recommitting to the Aukus agreement with the US and UK

November 2022

Albanese meets China’s president Xi Jinping in Indonesia ahead of a trip by Penny Wong, Australia’s foreign minister, to Beijing

February 2023

China receives the first shipments of Australian coal in two years, as the country reopens from strict pandemic curbs

august 2023

China lifts a three-year tariff on Australian barley, following Australia’s suspension of a complaint to the World Trade Organization

October 2023

Albanese confirms a state visit to Beijing highlighting the progress made in stabilising the relationship, with most trade sanctions unwound