Albanese’s China challenge: balancing trade and values

Prime Minister Anthony Albanese is back in Australia after a week in China. Did he come home with more than he had when he left? Yes and no.

Albanese can say he met Chinese President Xi Jinping for two hours of talks, had a banquet lunch, magnificent dinners (Paul Kelly and Powderfinger songs!) and basically mended the rift from the Scott Morrison years.

The two leaders were warm in their comments towards each country. Albanese can take this as an embrace, giving rise to a feeling as warm and fuzzy as watching a panda frolic in the sun.

Albanese’s week was an act of diplomacy that was necessary to Australia’s economic wellbeing. According to the Department of Foreign Affairs and Trade, China is Australia’s largest two-way trading partner.

Trade with China in 2023-24 accounted for 26 per cent of our goods and services trade with the world. Two-way trade with China totalled $325 billion, of which goods and services exports were $212.7 billion. Iron ore exports to China last year alone were worth $US79.6 billion ($121 billion).

The seeming harmony of the past week is a far cry from the years of Morrison’s government, when China placed trade bans worth about $20 billion on exports over what it saw as Australia’s hostility towards it, partly due to Morrison’s view on the origins of COVID-19, though this was never the stated reason. The sanctions have since been lifted.

Anthony Albanese visits the Great Wall of China.Credit: Dominic Lorrimer

The thawing of this latest Cold War between Australia and China should be seen as but one front on the bilateral battlefield. While it is true, as French historian Montesquieu wrote 300 years ago, that “peace is a natural effect of trade”, it is not the only factor.

In dealing with China, a set of scales is always on the table. On one side is the money and trade-derived wealth, on the other is the very nature of the regime, that is, its authoritarianism, its geopolitical ambitions, its treatment of its people and minority groups within its borders, including its suppression of human rights and dissent.

After he met Xi on Tuesday, Albanese said they had agreed “dialogue must be at the centre of our relationship. If you don’t have communication, you can have misadventure and misinterpretation.”

Albanese spoke of “patient, calibrated advocacy” on some issues. It would seem different layers of dialogue were in play.

China’s Premier, Li Qiang, criticised the Foreign Investment Review Board for what China saw as unwarranted changes to approvals for Chinese business, and moves to relieve Chinese-owned infrastructure operator Landbridge of its 99-year lease on the Port of Darwin.

“We hope that the Australian side can provide a fair, open, and non-discriminatory business environment for Chinese enterprises in Australia,” Li said. His remark goes to the heart of Australia’s relationship with China in other areas.

Albanese may have walked in the footsteps of Labor giant Gough Whitlam when he walked along the Great Wall, but he had contemporary, awkward and constant diplomatic issues as companions.

The first of these is how to balance Australia’s relationship with the United States, particularly with the volatility of Donald Trump’s administration, our $368 billion commitment to AUKUS submarines, and the enjoinders from America’s Secretary of Defence, Pete Hegseth, and Under Secretary of Defence, Elbridge Colby, to commit billions and, in essence, follow US foreign policy in relation to China.

The second is Taiwan, which China wants to reclaim, a move America opposes. Albanese told Xi that Australia supported Taiwan’s present position.

China as a one-party government survives through protection, expansion and repression. The first two it does through soft power, such as its global infrastructure project the Belt and Road Initiative, and financing (some may say corruption) of Pacific countries, and creeping military exercises, such as naval exercises around friendly countries, such as Australia this year, and building artificial naval islands in the South China Sea.

The latter it achieves through a vicelike grip on dissent. In the northwest province of Xinjiang, China has been accused worldwide of persecution and human rights abuses against Uyghurs and other minorities.

Elsewhere, individual examples include the jailing of Chinese-Australian academic Yang Hengjun, who last year was given a suspended death sentence, and Cheng Lei, a China-born Australian journalist working in China who spent three years in jail on charges of espionage.

She was released in 2023 after intense diplomatic lobbying. That a journalist can be thrown in jail for “espionage” speaks to the dark side of the coin.

Albanese needs to show to Australia and, indeed, the world, that he sees China with open eyes and acts accordingly. When he says, “Showing a little bit of respect to people never cost anything. But you know what it does? It gives you a reward” he cannot be blinded by the might of the dollar.

It is true, as he said, that a good relationship with China is important to our economy. Indeed, a quarter of jobs depend on our trade with China, our largest trading partner and the second-largest economy in the world.

We take this quote of his – “Respect matters between countries. One of the things that my government does is engage in diplomacy. We don’t shout with megaphones, we engage in diplomacy. That is in Australia’s interest” – and pin it to his lapel.

Given the instability of America’s trade position with Australia – tariffs this week, no tariffs next week – the pivot to Beijing is understandable, and necessary. It won’t be smooth, not least on issues like the Port of Darwin.

All of this made this long trip a high-wire act. Albanese said the right things to the right audiences at the right times, and for that, this more mature handling warrants credit. Next stop America.

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