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Diversifying into – not out of – the Australia-China Relationship

The Australia-China relationship is hard. It is also arguably Australia’s most critical foreign policy challenge. How do we navigate the increasingly assertive stance of an authoritarian power – with a culture, history, language and values so different to our own – when the economic and security stakes are so high? 

The challenge for a middle power like Australia is especially salient when viewed in the context of a China no longer satisfied to abide by the world order but emboldened to shape it – and an inward-looking United States continuing in its retreat from global leadership.

An extensive relationship

Readers need no reminding of the depth of Australia’s connection with China, and the charts below are included purely for interest. China is our largest two-way trading partner and export market by a considerable (and growing) margin. It is also our largest source of international students and leading partner in the production of scientific publications ( See UTS-ACRI “The Australia-China Science Boom” for more detail). Over 1.4 million Australian residents have a parent born in China and over half a million were themselves born there.

In the doldrums

The great irony is that despite our deep connections, Australia-China relations continue to deteriorate – following a negative trajectory that has persisted since at least 2017.

The recent detention of prominent Australian media presenter Cheng Lei and forced departure of Australian China correspondents Bill Birtles and Mike Smith, are especially worrying. So too are the visa rejections of Chinese academics Chen Hong and Li Jianjun, and allegations that Australian authorities raided the homes of Chinese journalists in June.

The problem with attempting to backtrace this ‘tit-for-tat’ decoupling is that it is very difficult to know at what point to stop. Taking often sensationalist media headlines (on both sides) at face value is also problematic – much nuance is lost in the noise.

Amidst increasing polarisation between the “panda-hugging” business community and the “dragon-slaying” security and defence hawks, the opportunity for constructive dialogue is being forfeited. 

Questions of dependence

Those who grumble at Australia’s economic “dependence” should remind themselves of the enormous benefits Australia has enjoyed, and continues to enjoy as a result of its trading relationship with China. Our economic exposure to China is the by-product of decades of successful, complementary trade, not some strategic error or failure in risk management.

Likewise, the idea that diversification is a silver-bullet solution to our woes fails to account for economic reality. We cannot simply pull a lever and expect other markets (India, ASEAN, etc.) to absorb what we no longer wish to sell to China; nor are we able to suddenly cut China out of long-established import supply chains. 

While it is prudent to invest in building links and laying groundwork for expanded trade and investment relationships with other countries over the longer term, neglecting (or deliberately dismantling) economic ties with China will only serve to jeopardise our current economic prosperity.

China will certainly play an important role in Australia’s post-COVID recovery as the only G20 economy expected to report positive economic growth this year, and the first to report a turnaround in activity. Meanwhile, other major economies continue to languish.

To be clear, there are significant risks embedded in the Australia-China relationship, chief among them Beijing’s growing cyber espionage capabilities and intelligence operations targeted at Australia. Its attempts to exert influence in domestic politics and on university campuses have been the subject of heated debate. 

Concerns over economic coercion flared earlier this year when China’s Ministry of Commerce imposed anti-dumping duties on Australian barley imports, and again when it commenced new anti-dumping investigations into Australian wine.

 P2P is the key

The fact that Trade Minister Simon Birmingham has been trying to contact his Chinese counterpart Zhong Shan to no avail throughout this spat – is particularly striking. While the political motivations for a high-level communication freeze are clear, I cannot help but contrast this with my personal experience – were I to pull out my phone and message any of my hundreds of Chinese contacts on WeChat, I would likely receive an almost instant reply.

People-to-people links are the glue holding the bilateral relationship together during times like these. DFAT Secretary Frances Adamson puts this more eloquently:

“Strong people-to-people connections have always been fundamental to developing the sophisticated and mature Australia-China relationship we now have… these ties have proven invaluable to facilitating cross-cultural understanding and sustaining bilateral progress, even in the face of adversity and the profound transitions we are seeing on the international stage.”

Investing for the future

Building – and maintaining – grassroots forums and communities connecting younger Australians and Chinese as they move into positions of leadership, will be essential to ensure communication backchannels remain open when the relationship faces inevitable headwinds. 

Australian universities must find ways to create more inclusive communities for Chinese international students so they return home with more than a $100,000 piece of paper. Post-COVID support for Australian students and researchers to travel to China for study and work  should be increased, not reduced. Expanding the scope, frequency, and most importantly the quality of such exchanges will allow us to better understand each other’s countries, and foster avenues of spin-off collaboration down the track. 

We must also prioritise mobilising the cultural, linguistic and intellectual resources of our diaspora communities, instead of alienating and ‘othering’ them, and boost language and culture education in the community more broadly. 

Through these kinds of investments, we can identify shared interests that unite our countries and build diversity into the Australia-China relationship, rather than pursuing a reckless path to “diversify out of it”. 

Whether we like it or not, China is here to stay. At this critical low point fraught with political, economic and security challenges, instead of turning our back on China, we must continue developing and growing the connections that will set the tone for better days ahead. 

The challenge for a middle power like Australia is especially salient when viewed in the context of a China no longer satisfied to abide by the world order but emboldened to shape it – and an inward-looking United States continuing in its retreat from global leadership.

An extensive relationship

Readers need no reminding of the depth of Australia’s connection with China, and the charts below are included purely for interest. China is our largest two-way trading partner and export market by a considerable (and growing) margin. It is also our largest source of international students and leading partner in the production of scientific publications ( See UTS-ACRI “The Australia-China Science Boom” for more detail). Over 1.4 million Australian residents have a parent born in China and over half a million were themselves born there.

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