China’s efforts to soften up Australia test Canberra’s steadfastness

Australia, one of the partners in the Quad, began efforts to normalise relations with China last year, after a period of high-octane clashes over a number of issues over the past decade. Australian Prime Minister Anthony Albanese visited Beijing in November 2023 -- the first by an Australian leader since 2016. The two countries agreed to gradually lift tariff restrictions on a number of goods.

With over $270 billion in bilateral trade, nearly $56 billion in Chinese investments, a free trade area signed in 2015, close partnership in the RCEP, Australia-China economic relations had been on the upswing since the 1990s, but have soured recently. Australia was the largest exporter of iron ore to China and the third largest supplier of copper, crude oil, nickel and the fifth largest exporter of aluminium. All these tumbled in the last decade.

China’s growing influence operations in Australia, its efforts to create a wedge between Australia and the US, and Australia’s call for investigation into the Covid-19 outbreak have all roiled bilateral relations.

China began restricting imports of Australian products. It banned the import of Australian meat processing plants, thermal and coking coal, lobsters and log timber, and imposed 80% tariff on Australian barley and anti-dumping measures of about 200% on Australian wine.

Australia retaliated with an anti-dumping probe into imports of steel, paper, silicon, etc., from China. It also excluded China’s Huawei from its 5G telecom build-out.

At the political level, although the two countries decided to have summit-level meetings and strategic dialogues, mutually acrimony ensured that things did not go far. China’s leaders from Jiang Zemin to Hu Jintao and Xi Jinping have visited Canberra. But Australia got a taste of Chinese irredentism as early as in 2003 when Hu Jintao, during an address to the Australian parliament, reminded his audience of the Ming Dynasty’s maritime expeditions under Admiral Zheng He. Yet, during Xi Jinping’s visit in 2014, the two countries embarked on a “comprehensive strategic partnership”.

Australia’s tensions with China mounted when the Liberal Party was in the saddle under Prime Ministers Malcolm Turnbull and Scott Morrison. The current Labour PM Anthony Albanese, who took over the reins in 2022, began opening up to China. Interestingly, the previous leaders John Howard, Kevin Rudd, and Julia Gillard followed a policy of not choosing sides between the US and China – due to the growing economic relations with Beijing. Famously, Howard said in 2003 that “We can be close to the US yet develop a very constructive relationship with China”. This not only opened the door for China to enter Australia in a big way, but it also created fissures in Australian politics.

What followed was a steady increase in China’s influence over Australia. Politicians, business establishments, think-tanks, universities, travel groups and others began to receive donations from China. Labour Party Senate leader Sam Dastyari resigned in 2018 after allegations of receiving funds from Beijing. In 2009, China’s state-owned Chinalco wanted to invest in debt-laden mining Anglo-Australian company Rio Tinto. However, the deal was cancelled. In 2013, the University of Sydney cancelled a visit by the Dalai Lama under pressure from Beijing.

While China intended to wean Australia away from the US alliance system, the opposite happened, with Canberra joining the Quad and even signing up for the AUKUS security arrangement for the supply of nuclear-powered submarines. But Australia has wavered earlier. In 2007, when Kevin Rudd was Prime Minister, it succumbed to Chinese pressure against joining the Quad, then an idea proposed by the late Shinzo Abe of Japan, and discontinued participation in the Malabar Exercises with India. Canberra reversed these by joining the Quad in 2017.

Beijing’s continuing efforts to soften up Canberra and the latter’s predicament has implications for the emerging regional order, including for India. Indeed, for both India and Australia, China’s recent assertions on Taiwan, South China Sea, Senkaku Islands and the India-China boundary issue are dangers to peace and stability in the region. Both are also concerned about China’s increasing violations of international law in the maritime domain. On the other hand, on China’s Belt and Road Initiative, some provinces in Australia seem tempted to be part of it; India, on the other hand, is critical of the BRI for violating sovereignty and territorial integrity, lack of transparency, debt diplomacy and posing environmental hazards. China, as among the largest trading partners for both India and Australia, continues to seek ways to exploit their dependencies and vulnerabilities. Therefore, Australia will need to be a lot more steadfast vis-à-vis China.