Defence policy the ‘elephant in the room’ looming over Albo’s high-stakes China trip
One major issue is looming large over Anthony Albanese’s high-stakes visit to China against a backdrop of regional uncertainty in the Pacific.
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Anthony Albanese has touched down in Shanghai, kicking off a mammoth six-day state visit to China.
The Prime Minister and his fiancee Jodie Haydon were greeted by a small welcoming party on the tarmac as they descended the air stairs hand-in-hand.
Among those waiting for them were Chinese ambassador to Australia Xiao Qian and two young students, whom Mr Albanese said made the welcome “warm”.
“It’s wonderful to be back here in Shanghai for my second visit to China as the Prime Minister of Australia,” Mr Albanese told reporters.
“There are important meetings to be had this week, and the fact that I am leading a very large business delegation speaks to the importance of the economic relationship between Australia and China.
“We know that one in four of Australia’s jobs depends on our exports, and China is our major trading partner, with exports to China being worth more in value than the next four countries combined.
“So this week, we will have important meetings about tourism, about decarbonisation of steel, about the full range of issues.”
But against a backdrop of China’s rapid military build-up and increasing aggression in the Indo Pacific, Mr Albanese faces far harder conversations than televised tarmac niceties with grinning officials.
Chasmic differences loom large on defence, global trade, human rights and the region.
Australia-China Relations Institute director James Laurenceson told NewsWire that was all the more reason to talk.
“Even if we don’t like everything that China is doing in the strategic and security space, they are Asia’s leading strategic power,” Mr Laurenceson said.
“So if you look around the region, there is no country that wants to talk less with China because it’s a reality that even if you’ve got geopolitical or other conflicts with China, you’ve got to be able to manage those issues.”
Defence: agree to disagree
Defence is the elephant in the room.
In the last year, China has test-fired a nuclear-capable missile, harassed an Australian surveillance jet in international airspace and carried out live fire drills off Australia’s coast while circumnavigating the country with warships.
All the while, China’s estimated nuclear arsenal has nearly tripled since 2020, which Deputy Prime Minister and Defence Minister Richard Marles said last month was driving “security anxiety” in Canberra.
Australia has committed tens of billions in extra military spending over the next decade amid defence assessments warning a conflict in the region could break out by 2034.
The US has put it at 2027.
Much of the defence funds are earmarked for long-term projects, such as AUKUS, which critics argue have come at the cost of Australia’s immediate war-readiness.
Pointing to Washington’s mixed signals on AUKUS, Mr Laurenceson said it was important to keep comms “open” with Beijing.
“Lurking in the background is the fact that you’ve got the US as a less reliable strategic partner,” he said.
“That provides some incentive to at least keep that dialogue in the strategic space open.”
He said he expected Mr Albanese would navigate defence as “he’s been doing since he came to government”.
“He’ll say that AUKUS is not up for negotiation,” Mr Laurenceson said.
“The fact that Beijing doesn’t want us to pursue it … they’re entitled to press that case, and they will, they have done and they’ll continue to do it.
“But that’s not something that Canberra needs to weigh too heavily.
“Canberra’s job is to make decisions that it thinks are in Australia’s national interest.
“I’m very confident that despite all Beijing’s grumblings around AUKUS, they’re not going to blow up the bilateral relationship more broadly because of it.”
Trade: a lifeline
Where Australia and China have the most common ground is trade.
While Donald Trump seeks to pump the breaks on Australian goods entering the US, the Chinese President asks for more.
The Albanese government has convinced Mr Xi to remove $20bn in trade barriers, letting Australian barley, lobsters and wine flow freely into China once again.
“The Chinese market is bigger than our next four largest markets combined,” Mr Laurenceson said.
“Some of those other four biggest markets are actually closing up.
“Ideally, we’d like to diversify trade away from China but in fact, the US, which is currently our third largest market, is actually making it harder for Australia to export its stuff there.
“So, China wants stuff, and trade is flowing freely between Australia and China right now.”
While China has been keen to embrace Australian products, which often attract a premium price tag, Beijing has made clear it will not play fair in all sectors.
China is the world’s leading producer of critical minerals – precious materials vital to everything from cars to phones.
Australia’s fledgling rare earth industry is the biggest challenge to China’s dominance in the space.
So seriously is the threat being taken that Australia’s leading mining firm, Lynas Rare Earths, has been hit by a relentless cyber campaign stoking fear around its projects in Australia and abroad.
Mr Laurenceson said it was good that Mr Albanese “is wanting to position Australia as a an alternative for other countries in critical minerals supply chains”.
“That makes perfect sense,” he said.
“We don’t want to be in a world where we’re locked in to highly concentrated sources of supply.”
The EU has signalled it would like more Australian critical minerals to cut back its reliance on China.
The Albanese government has also leaned heavily on critical minerals in tariff negotiations with the US.
But as Mr Laurenceson pointed out, the biggest market for rare earths is China.
“To give you one example, 98 per cent of Australia’s lithium goes to China,” he said.
“Now, why is that? Is that because we love them? No, it’s because they’re the ones who want to buy it.
“America is at least 10 years behind China’s capabilities in the energy transition space, so we’d love to sell more lithium to America, but they just don’t want it because they haven’t got the industries there.”
He added that the US was also “busy building out its own domestic supply chains of lithium”.
“So Australia still has to engage with that economic reality,” Mr Laurenceson said.
Balancing act
Other sore points Mr Albanese will need to navigate are China’s human rights abuses in its province of Xinjiang and Labor’s election commitment to scrap Port of Darwin’s 99-year lease to a Chinese company.
Australia has criticised China for torturing and enslaving Uighurs in Xinjiang and called on Beijing to implement all recommendations made in a United Nations report on the abuses.
The Chinese government has in turn accused Australia of “hypocrisy”, saying the Australian Defence Force has committed “abhorrent crimes”.
On the Port of Darwin, the Albanese government has not ruled out forcing China’s Landbridge Holdings to sell it back to an Australian firm.
The deal was greenlit by the Turnbull-Coalition government a decade ago.
Beijing has indicated it would bring up the touchy topic when Mr Albanese visits.
Despite the points of friction, Mr Laurenceson said Mr Albanese’s approach was “working”.
“I think he’s doing exceptionally well,” he said.
He described both Canberra and Beijing as being “pragmatic and clear eyed” about the relationship.
“Neither side is willing to let the differences define the relationship, but neither side is kidding themselves that the other is geopolitically aligned,” Mr Laurenceson said.
“And frankly, that’s not bad.
“I wish we had a bit more pragmatism and clear eyedness towards the US at the moment.
“I think that would serve Australia’s national interests if that approach we take to China was wheeled out more generally.”
Originally published as Defence policy the ‘elephant in the room’ looming over Albo’s high-stakes China trip
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