Extending the Olive Branch: China-Australia Relations

It is the third time Beijing has extended an arm of friendship towards Canberra since the new Australian Labour Prime Minister Anthony Albanese assumed power. The desperate move comes at an interesting juncture of geopolitical and economic tensions between the two nations.

When things turned sour

A traditional US ally, Australia, which  established formal diplomatic relations with the People’s Republic of China (PRC) in 1972 after it broke off ties with Taiwan to accept Beijing’s One China Policy, considers itself China’s “Zhengyou” (“诤友”) or “a friend who frankly admonishes one over one’s faults”. While political differences such as China’s activities in the South China Sea have always been a  contentious issue, the relationship has also seen some high points such as under  the regime of Labour Party Prime Minister Kevin Rudd, a fluent Mandarin speaker, who backed out of the Quadrilateral Security Dialogue (Quad) over China’s protests and recognised it a major part of his Three Pillars Policy towards Asia.

Relations however soon turned sour under Prime Minister Malcolm Turnbull when the issue of China’s territorial claims in the South China Sea and its alleged attempts at influencing Australian Parliamentarians through donations and espionage were fiercely raised. This resulted in the ban on Australian political parties receiving foreign donations of Australian $1000 or more.

If relations sharply deteriorated under Turnbull, the worst was yet to come under his successor Prime Minister Scott Morrison as Australia actively voiced its protest against China’s mistreatment of the Uighur minority in Xinjiang and over human rights concerns in Hong Kong, both domestically and at the United Nations , calling Beijing to honour the Sino-British Treaty. China protested to such moves claiming it to be an interference with its sovereign rights.

The lowest point came when Canberra called for an independent investigation of the origins of the Coronavirus pandemic, assuming the Wuhan lab to be the source of the virus. Beijing fiercely responded by imposing an outright ban on Australian coal while slapping heavy tariffs on other exports such as barley and wine, some going up till 200%. Beijing even “indefinitely” suspended the China-Australia Strategic Economic Dialogue (which Canberra described as a “premier bilateral economic meeting with China”), accusing Australia of flaring a “Cold War mindset”.

It later presented a list of 14 demands to Australia, calling it out on the alleged funding of “anti-China” activities in research centres as well as for carrying out a ” crusade” against its policy on Taiwan, Hong Kong and Xinjiang which were described to be  against Chinese interests and  sovereignty.

Canberra however, did not let the issue slide and expressed concerns over the developments in Hong Kong in a joint statement with the Five Eyes to which China responded in a highly confrontational tone by stating : “No matter how many eyes they have, five or 10 or whatever, should anyone dare to undermine China’s sovereignty, security and development interests, be careful not to get poked in the eye.” Australia soon turned down investments from many Chinese companies such as Huawei in 5G technology over concerns of national security. The overall investment resets during the pandemic resulted in a 61% in Chinese investments to Australia in 2020, the lowest in six years.

Another major controversy erupted when China’s Foreign Ministry spokesperson Zhao Lijian shared a computer image of an Australian soldier slaying an Afghan baby after reports surfaced of the involvement of Australian soldiers in the killing of two boys in Afghanistan. Prime Minister Morrison severely protested over the image and demanded Twitter to take it down which was refused. He later refused to further amplify the issue.

In September 2021, Canberra joined Washington and London in a new politico-military alliance called AUKUS (Australia-United Kingdom-United States) which involved buying nuclear power submarines from the United States. Though China was not explicitly mentioned, the alliance considers Beijing’s incursions in the South China Sea as a concern which included incidents involving  passage of Chinese ships near Australian shores. 

Australia also participated in a US led diplomatic boycott of the Beijing Winter Olympics held this year over human rights violations in China and also expressed concerns over a bilateral agreement signed between China and Solomon Islands which provide Beijing military access in the Pacific. Imposing sanctions on Russia over its invasion of Ukraine, Canberra criticised Beijing’s support of Moscow.


China has used the election of Anthony Albanese of the Labour Party as the new Australian Prime Minister as a perfect moment to extend an arm of friendship, with the idea that a centre-left  Labour government would adopt a softer attitude towards Beijing which has earned them much criticism from their adversaries such as Morrison who have gone to the extent of referring Albanese as a “Manchurian candidate”, i.e. the one who acts on behalf of the enemy’. Chinese Premier Li Keqiang was among the first world leaders to send a congratulatory message to Albanese on his election victory. Beijing has also toned down its ambitions in the Pacific through a position paper where no mention is made of policing and cybersecurity cooperation, issues which Canberra raised concerns upon. China has also tried to reach out to Australia with state media Xinhua  describing the approaching 50th anniversary of Former Australian Prime Minister Gough Whitman’s diplomatic embrace of the PRC as a “rare opportunity” which must be used to reset ties.

This newfound reconciliatory approach stems primarily from emerging economic and geostrategic concerns.

Strong Economic Strings

While political relations have sharply deteriorated, economic ties still remain robust. China stands as Australia’s largest two way trade partner, accounting for  nearly one-third of its trade with the world. The sanctions on  exports have adversely impacted the Australian economy but the ill effects have been lessened by seeking markets elsewhere as well as Beijing’s demand for Australian iron which compensated for other commodities. However, many believe a long term solution would be bettering ties with China.  The Chinese economy which came out looking better than others in the first wave of the pandemic has received a major setback as the virus cases resurged, making recovery a priority for which Australian exports, specifically steel, are essential.

Losing Pacific

A rapprochement attempt comes at an interesting juncture in the geopolitics of the Indo-Pacific region as China’s bid to establish security cooperation with 10 island nations of the Pacific fell flat on its face. The cold shoulder that the island nations have given to Beijing coupled with a much more ambitious plan for Quad which includes security and economic cooperation agreements like Indo-Pacific Maritime Domain Awareness (IPMDA) and Indo-Pacific Economic Framework for Prosperity (IPEF) to counter China’s military and economic influence in the region have unsettled Beijing into action. Extending an olive branch towards Australia could be a way of watering down and weakening, if not completely dissolving, such measures; for Canberra is the only country out of the Quad (India, US and Japan being the other three) which Beijing does not have long term, serious political differences with.

Will Albanese embrace Xi?

He might, to some extent though a softer approach would not be the reason this time. Refuting the claim of being sympathetic towards Beijing, Albanese stated that China has become “more forward leaning” and more “aggressive” which calls for action from Canberra. He has clearly stated that the only path to rapprochement would be Beijing’s upliftment of the sanctions.

He has not just himself actively participated in an ambitious Quad plan but has also, along with his Foreign Minister Penny Wong, attempted to extend cooperation with the Pacific Islands which many believe brings it in direct confrontation with China over influence in the region. However, considering the importance of economic engagement, a prolonged conflict is neither beneficial for Beijing nor Canberra. Moreover, critics point out major flaws in the structure of the alternative arrangements such as the  IPEF which is meant to function broadly as a US led trade framework rather than a structured trade agreement and lacks the provision of  market access to all members, which might not be successful enough in preventing them from doing business with China.

In the light of this context, what appears presently as a contest for winning over Pacific Islands might just be a way to decide who would first give way to the other: if Beijing loses out, which appears to be the case, it would silently lift the sanctions and resume trade; if Canberra loses, it would leave the immediate demand of lifting the sanctions and work to improve ties with China. Beijing is also likely to avoid engaging in any major confrontation before Xi Jinping gets himself re-elected for a third term at the 20th Party Congress to be held later this year. Both Australia and China seem to realise that dialogue and engagement with the other would be the only way ahead. While a full fledged “reset” in ties cannot be expected, Albanese is likely to be softer and more pragmatic than Morrison while a bit harsher than Rudd in dealing with Beijing.

Cherry Hitkari
Cherry Hitkari
Non-resident Vasey Fellow at Pacific Forum, Hawaii. Cherry Hitkari is an Advisory Board member of 'Tomorrow's People' at Modern Diplomacy. She holds a Masters in East Asian Studies specialising in Chinese Studies and is currently pursuing an advanced diploma in Chinese language at the Department of East Asian Studies, University of Delhi, India.