China has threatened Australia with a trade war if ‘growing lack of trust' continues

AUSTRALIA’S most crucial trade relationship is under threat — and the impact could take a serious toll on our industries.

AUSTRALIA’S most crucial trade relationship is under threat — and the impact could take a serious toll on our industries.

Chinese ambassador to Australia Cheng Jingye has criticised the state of Canberra and Beijing’s relationship, warning that Australia needs to do more to “increase mutual trust”.

“If there is a growing lack of mutual trust, in the long run it may have some undesirable impact (on trade relations with China),” he told The Australiantoday.

“Unfortunately, over a certain period, especially starting from the latter half of last year, we have seen a kind of systematic, irresponsible, negative remarks and comments regarding China which has caused adverse impact on bilateral relations.

“It is detrimental to the image of Australia in the eyes of the Chinese public. It is something that neither side would like to see.”

His trade warning comes as Australia is attempting to bring in laws to stop foreign donations to political parties.

Ambassador Cheng Jingye dismissed suggestions China was trying to interfere in Australian politics as “groundless”.

He also warned that the public needs to decide whether it sees China as an opportunity or a threat.

“Some Australians, a minority, always see China through coloured lenses — totally dark glasses,” he said. “If you have a deep-rooted prejudice against somebody or some thing, you may find everything in a twisted ­manner and you cannot come to a rational judgment.”

China's ambassador to Australia Cheng Jingye has warned our trade relationship with China may falter if relations don’t improve.

Speaking from London, Mr Turnbull downplayed reports that the relationship was under threat.

“We have a very strong economic relationship with China, in fact it’s strengthening all the time,” he told reporters.

“From time to time there are differences in the relationship, if there are ups and downs, it’s from a very, very high base.

“Trade has never been higher in every respect.”

He also said the government would not back down from the foreign donation laws.

“We are taking every step that we can, with our foreign interference legislation, to ensure that Australians, and Australians only, are the ones who influence Australian political processes,” he said.

PM @TurnbullMalcolm: We have a very strong economic relationship with China, strengthening all the time. We are committed to a stronger relationship and from time to time there are differences but it's always from a high base.

MORE: https://t.co/A33vWR2iE9 #FirstEdition pic.twitter.com/kjywyyOh0i

— Sky News Australia (@SkyNewsAust) April 18, 2018

But despite the Prime Minister’s reassurances, things have been rocky between the two countries — and it’s hardly the first time China has threatened us.

Last month, it was reported China had been deferring a range of visits in order to take a political stand against Australia.

The state-run Global Times newspaper has described Australia’s behaviour in recent years as “baffling” and “repugnant”, accusing us of being an “anti-China pioneer in the last two years” and warning that Canberra “cannot afford worsening ties with China”.

China’s embassy in Canberra has issued safety warnings to Chinese students living in Australia, although new figures have revealed that the number of Chinese students studying here is actually rising.

WHAT DOES THIS ALL MEAN FOR AUSTRALIA?

Richard McGregor, senior fellow at the Lowy Institute and author of The Party: The Secret World Of China’s Communist Rulers, warned the relationship was “very strained and it will take a while to get better”.

“I do think Mr Cheng’s threat is valid,” he told news.com.au. “It’s not at the stage where China will try to enact an economic price as punishment for our alleged misbehaviour, but China has taken economic sanctions against other countries for alleged misbehaviour — South Korea, Norway, the Philippines. There’s no doubt they are willing to do it.”

He also warned that it — if China were to really hit out at Australia — it would be a public affair.

“When they want to punish a country they almost always do it very publicly, they do that because they want to drive a message home,” he said. “They want their citizens to know there’s a cost when it comes to disputes like this.”

A trade war would hit Australia harder than it would China, experts say.

A trade war would impact both sides, but McGregor said Australia would be hit harder than China would.

“Their political system can absorb punishment more easily than we can,” he said.

He warned it would largely affect our business, university and tourism sectors.

But this would require dramatic measures to go ahead, because these industries are based on private Chinese citizens’ choices — to study or travel in Australia, for example — which are separate from the government.

“If the government wanted to disrupt that, they would have to run a huge propaganda campaign against Australia,” he said.

He said the government’s decision to impose foreign donation laws was always going to get a backlash from China — but the issue isn’t going anywhere any time soon.

“The legislation still has to be passed, and when it is, the issue will be back in the headlines, particualrly if anyone is prosecuted through it.”

Labor foreign affairs spokeswoman Penny Wong said safeguarding Australian sovereignty came above partisan politics, but the government had been “clumsy” in its language towards China in recent months.

“Every Australian government of both political persuasions has had to manage differences with China,” Senator Wong told Sky News.

“I think we are seeing that this government’s management of those differences has been characterised by too much clumsiness in recent times.”

Senator Wong said foreign donations ought to be banned and greater transparency measures imposed on lobbying efforts on behalf of foreign governments to safeguard Australia’s sovereignty.

— With wires