Sun Oct 22

China-Australia relations head back to room temperature, with Albanese's November visit

Written by Michelle Grattan, Professorial Fellow, University of Canberra

The defrost in China-Australia relations started cautiously after the change of federal government last year. It then sped up, with developments culminating in the formal announcement at the weekend of the date for the much-anticipated visit by Anthony Albanese.

The bilateral relationship is fast heading back to room temperature.

The PM will visit from November 4 to 7. He’ll have talks with President Xi Jinping and Premier Li Qiang, and he’ll also attend the China International Import Expo in Shanghai.

The last days of preparation have seen major steps. First came the release of Australian journalist Cheng Lei ^[1], detained in China for three years (but writer Yang Hengjun is still there). This was followed at the weekend by the expected breakthrough on China’s restrictions on Australian wine, which prompted Australia to commence action at the WTO in 2021.

China will review, over five months, its duties on the wine; Australia will suspend its WTO action. A statement from Albanese said that “if the duties are not removed at the end of the review, Australia will resume the dispute in the WTO. We are confident of a successful outcome.”

Breaking the impasse on wine is a big deal for producers. Before the duties, China was Australia’s largest wine export market.

The lack of access to China has been devastating for many in the industry, with exports to that country falling from $1.1 billion in 2019 to $16 million in 2022. Unlike some commodities that China hit, for which alternative markets were found, wine producers have had trouble selling elsewhere.

Overall, China is our largest trading partner, representing nearly a third of our total trade. At their height China’s trade restrictions on Australia amounted to some $20 billion. They are down to about $2 billion.

Albanese’s trip will come 50 years after then PM Gough’ Whitlam’s historic visit, which was the first by an Australian prime minister.

Whitlam told a banquet in Peking on October 31, 1973: “In China today we see a great modernising force, capable of exerting profound influence in the world. Close co-operation and association between our two peoples is both natural and beneficial.”

The Whitlam trip “laid the ground work for the diplomatic, economic and cultural ties that continue to benefit our countries today,” Albanese said on Sunday.

Over the decades the relationship has, for Australia, been enormously important economically, but at times very rocky. Albanese’s visit will be the first by an Australian prime minister since Malcolm Turnbull’s in 2016.

An already downward spiral in relations, driven by various issues, worsened dramatically when Australia led international pressure for an inquiry into the origins and early handling of COVID, which began in Wuhan.

The bilateral thaw has been considerably driven by China’s perception of its wider foreign policy interests, with last year’s change of government greatly facilitating the recalibration.

But Albanese and Foreign Minister Penny Wong have remained cautious, against the background of China-United States tensions, the Taiwan issue, China’s courting of small Pacific countries, and the speed with things can change. They are keen to say the government will disagree with China where it must and always act in Australia’s national interest.

Meanwhile Mike Burgess, head of ASIO, has called fresh attention to China’s unrelenting spying activities, last week revealing an attempt to “infiltrate a prestigious Australian research institution”.

Among the topics for discussion during Albanese’s visit will be co-operation in economic areas, climate change and people-to-people links.

Albanese will be accompanied by Trade Minister Don Farrell, who has done much of the detailed trade negotiations to unlock the restrictions.

Speaking to journalists before leaving on Sunday for his visit to the United States, Albanese said, “It is important that we stabilise our relationship with China. That is in the interests of Australia and China, and it is indeed in the interests of the world, that we have stable relations, and that is what this visit will represent.”

Asked whether he would hope Xi would visit Australia, Albanese said, “we’ll have discussions about that”, noting Xi has been here a number of times.

Albanese said that in Washington this week he would be having discussions about progressing the legislation needed under the AUKUS agreement.

He’ll also be canvassing the potential benefits for Australia from the US Inflation Reduction Act. Among its objectives, this act seeks to drive clean energy. “As we move to a clean energy global economy, Australia is in a strong position to benefit because of the critical minerals that we have,” Albanese said.

The Prime Minister will be given a state dinner. This is the ninth time he has met President Biden, formally or informally, since becoming PM.