Albanese meeting Xi would help Australia get to a better deal with China

Author: Neil Thomas, Asia Society Policy Institute Center for China Analysis

Australian Prime Minister Anthony Albanese’s government has overseen a turnaround in Canberra’s relations with Beijing that hints at a larger scope for other countries to balance business and security in their dealings with China. Albanese’s strategy is also enabling Australia to benefit from the diplomatic opportunities presented by China’s economic difficulties.

When Albanese took office in May 2022, Australia–China relations were in bad shape. Following former prime minister Scott Morrison’s call in 2020 for an inquiry into the spread of COVID-19 from China, Beijing imposed trade sanctions on AU$25 billion of Australian exports. The Chinese embassy shared an abrasive list of 14 grievances against Australia, while the former Australian defence minister Peter Dutton (now Leader of the Opposition) made historical comparisons between China today and Nazi Germany and counselled to ‘prepare for war’. Canberra’s poor reputation in the Pacific arguably helped Beijing to seal a security pact with the Solomon Islands. There were no ministerial meetings for over two years and there had been no formal leader-level talks since November 2016.

What a difference a year can make. Albanese met Chinese President Xi Jinping on the sidelines of the G20 summit in November 2022 and communication between Australian and Chinese ministers is increasingly routine. Beijing has eased its bans on most Australian exports, though restrictions persist on barley, seafood and wine. Australian Foreign Minister Penny Wong has reinvigorated Australian diplomacy not only in the Pacific but also in Asia and the wider Indo-Pacific. Australia’s steady pattern of dialogue with China now aligns with that of its main ally, the United States.

Most notable about the improvement in bilateral ties is that Albanese has not weakened Australia’s position on any of China’s stated grievances. Canberra is enhancing its support for the US-led security architecture, through avenues like the AUKUS partnership with the United States and the United Kingdom and the Quadrilateral Security Dialogue with the United States, Japan and India.

Albanese has condemned Beijing’s human rights violations, endorsed the ‘de-risking’ of economic engagement with China and refused to extradite Australia-based democracy activists to Hong Kong. To be sure, he has made tactical concessions, particularly by not unilaterally sanctioning Chinese officials implicated in abuses in Xinjiang, mainly because such moves are unlikely to change Beijing’s conduct.

A part of this shift in fortunes is Beijing’s situation. China’s economy is troubled. Growth has barely recovered following the lifting of its zero-COVID policy and is constrained by Beijing’s limited headway in resolving structural problems such as high debt, low productivity, declining demographics, international trade pushback, and an overreliance on the property sector. In this context, economic coercion — which has usually been expensive and ineffectual for Beijing — is less attractive, especially after Russia’s invasion of Ukraine elevated the importance of Australia’s commodity supplies.

But the Albanese government deserves substantial credit for taking advantage of this opportunity through sensible diplomacy — including level-headed statements, constructive interactions and strength-building through collective action with like-minded partners. Australia–China relations would not have stabilised if Albanese had maintained the combative attitude of the previous government.

A next step for Albanese should be to visit China. This trip would preserve productive momentum in bilateral ties without diluting Australia’s dedication to a rules-based international order. It would raise the chances of Beijing lifting residual trade controls. It would show regional countries that Canberra recognises their and its own need to coexist with China. It would reinforce the message of US Cabinet members who have recently travelled to China, that strategic competition should not veer into conflict or preclude cooperation on global challenges. It would also boost the probability that Australian detainees in China such as Cheng Lei and Yang Hengjun can return home.

Calls for Albanese to condition his travel on the prior removal of all trade impediments or the prior release of detainees are understandable, but doing so would unfortunately make these outcomes less likely. China has its own domestic politics and Albanese’s visit would be a diplomatic gesture that makes it easier for Xi to justify the ongoing climbdown from China’s failed coercive diplomacy.

Albanese should use Beijing’s moderating economic policies to press Australian goals. Wong’s comment that a visit requires ‘continued progress’ on trade disputes, Trade Minister Don Farrell’s warning that Canberra could resume a World Trade Organization case against Chinese tariffs on Australian barley, and Treasurer Jim Chalmers’ reinforcement of these messages to his counterpart are fitting ways to set expectations of normalized relations with Beijing.

Albanese has not restored the golden era of Australia–China relations — that is neither possible nor the right ambition — he has simply brought some calm. This is probably as good as it gets for Australia–China relations in the readily foreseeable future, meaning regular meetings, firm yet non-belligerent political discourse, open economic exchanges in the vast majority of non-sensitive areas and Canberra working with partners to advance its own priorities and encouraging China to similarly embrace multilateralism. A stretch goal could be closer collaboration on transnational concerns like climate change and debt relief, if it is free of preconditions.

However, the Albanese detente is vulnerable to a US–China crisis or a resurgence in Beijing’s assertive diplomacy. Greater volatility is likely and Australia will choose to back itself and the United States in that event, yet measured rhetoric and coordinated responses would still reduce bilateral fallout.

The message for other countries is that strained Chinese economic circumstances present additional space to pursue independent foreign policies while continuing to do business with China. But capitalising on this demands a strategy that is strong in its commitment to self-determination but also to dialogue, diplomacy and multilateralism.

Neil Thomas is a Fellow on Chinese Politics at Asia Society Policy Institute’s Center for China Analysis.

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