Xi whiz! Australia’s finally maturing as an international player

China’s policy to manage Australia is one of “pressure and release”, as Kevin Rudd put it last October. And, in the current phase, it does both at the same time.

Anthony Albanese’s visit to China this week demonstrated that Australia is attempting to play the same game. On the same day that the prime minister met President Xi Jinping, Australia began the biggest warfighting exercises in its peacetime history. It hosted a gathering of over 35,000 troops from 19 nations in its northern reaches, land, sea and air.

Illustration by Simon LetchCredit:

These biennial Talisman Sabre drills started 20 years ago as a joint Australia-US effort. The last time they were conducted, there were 13 countries involved. The coalition grows as anxiety about China grows. The Australian military describes the exercises as “deterrence”. It’s no secret who they’re trying to deter.

“Everyone is seeing the aggressive activities that China is doing,” a US Army Lieutenant General, Matthew McFarlane, commented on the expanding number of participating countries. “That’s why they’re more interested in what they need to do to protect their sovereign interests.” All 19 countries happen to be democracies.

China will pressure Australia by exercising its military in increasing intensity, and release some of the pressure in trade and diplomatic transactions. Similarly, Australia will seek to resist China’s expansion by geopolitical moves including military exercises, new alliances and AUKUS, and simultaneously offer benefits in trade and diplomatic transactions.

The timing of the Talisman Sabre manoeuvres was set well in advance, so it was coincidental. But there was no Australian effort to tweak the official launch date or downplay the drills in any way.

It’s part of an emerging Australian attitude to Beijing – respectful yet unapologetic. Last week in Kuala Lumpur, for example, Penny Wong gave a speech to an annual meeting of foreign affairs ministers of the 10 ASEAN nations: “We have seen the worrying pace of China’s nuclear and conventional military build-up, without the transparency that the region expects. We are realistic about China’s objectives in changing the regional balance of power.”

In Anthony Albanese’s talks with China’s President Xi Jinping this week, he “did not shrink from the difficult topics”.Credit: Dominic Lorrimer

In response, Wong advocates that regional countries counter China by forming a balance of power “where no country dominates and no country is dominated”. Some Australian media fretted that this speech would arouse Beijing’s wrath. This is an echo of a former Australian cringe which Wong, gratefully, doesn’t seem to share.

In Albanese’s talks with China’s president, he did not shrink from the difficult topics.

He chided Xi for failing to give Canberra any notice of China’s naval exercises and live-fire drill off the Australian coast earlier this year. He urged Xi to allow more Australian investment. He asked for the release of the detained Australian writer and onetime Chinese diplomat Yang Hengjun, under a suspended death sentence.

On Xi’s part, he showered Albanese with every favour. The Chinese Communist Party has an elaborate system for managing foreigners, “waishi”, designed to achieve Mao Zedong’s aim to “make the foreign serve China”. Nothing is left to chance.

“It’s increasingly clear that Chinese President Xi Jinping’s preferred Western leader is Anthony Albanese,” the ABC’s Bang Xiao concluded. “The evidence? A six-day trip across China. A private lunch with Xi. The decision to prioritise Albanese over the foreign ministers of India and Russia, and more than four minutes of prime-time coverage of his visit on the 7pm CCTV News.”

Further, Xi was punctiliously polite and calculatedly warm. From what we know, he chose to sidestep Beijing’s gripes against Australia. For example, most Australian media outlets whipped themselves up into a lather anticipating that Xi would scold Albanese for daring to force the Port of Darwin out of Chinese ownership. The Chinese leader didn’t mention it once.

Much of the Aussie media wanted a drama. Xi had decided to give them only a romance. It was to be a happy visit for the Australian leader.

Why was Xi so determined to hand Albanese a diplomatic bouquet? Three reasons. First, on the specifics of the Darwin Port, it’s trivial in China’s formulations. Beijing is manoeuvring to cement state shareholding in a portfolio of some 50 ports worldwide, all currently owned by CK Hutchison.

This would give China’s state-owned Cosco a stake in ports from London to Germany, from South Korea to Jakarta, from Mexico to Malaysia, and dozens more including ports in Sydney and Brisbane. Why make a fuss about Darwin?

The second reason, and by far the most important, is that Xi and Albanese were acutely conscious that they were playing their parts in a pregnant moment: the reordering of global power.

Xi has long said that “the East is rising, and the West is declining”. But Donald Trump is accelerating the West’s decline at a rate Xi could not have dreamt in his wildest fantasies. Xi is portraying China today in studied counterpoint to Trump’s America.

Where Trump is alienating allies, Xi is extending the hand of friendship. Where Trump is imposing tariffs, China is offering new deals. Where Trump is madly erratic, Xi is projecting calm stability.

One striking indicator of how Xi’s China is offering benefits to other countries in contrast to the brickbats from Trump’s America: The Griffith Asia Institute reports that Xi’s Belt and Road initiative has entered into $US124 billion in new deals with other countries in the first six months of 2025. That is its fastest pace yet. Xi is determined to capitalise on the opportunity that Trump presents.

Xi’s lovemaking to Albanese this week was intended as a showcase moment for the rest of the world. And it worked for Albanese politically. With Trump refusing to meet him, he’s demonstrating that Australia has other options, that Australia will continue to deal with the world without reference to the US.

Besides, Australia has had a deal on the table in Washington for over three months now. Among other things, it’s an offer to give the US guaranteed security of the supply chain of Australian critical minerals. The Trump administration hasn’t bothered to respond.

With no interest from Washington, Albanese proceeded to Beijing where a different deal, and potentially an enormous one, was on offer. It’s the potential for Australian and Chinese companies to partner in the production of green iron.

Australia’s biggest existing export – iron ore – is facing a serious squeeze. Andrew Forrest’s Fortescue is leading a push to create new trade: to process the ore into green iron in Australia, for export to China. Albanese promoted the plan this week; Beijing is interested. If it proceeds, it could be two to three more times as valuable to Australia as its current rock-based export trade.

Economist Ross Garnaut advised Bob Hawke in how Australia could take advantage of China’s nascent boom in the 1980s. This week, Garnaut told me that Albanese’s “trip is as important as Bob Hawke’s trip to China in 1984 that set up the iron ore trade. It’s the future of the Australian economy.”

China and Australia are practising mutual geopolitical pressure, and mutual economic release.

In 2014, I wrote a paper for the Lowy Institute titled “The Adolescent Country”. It argued that Australia’s foreign policy was parochial, US-dependent and immature. Albanese is showing evidence that it’s maturing. He’s not kowtowing to Beijing nor fearing Washington.

It’s an improvement. But much more remains to be done. How would Australian foreign policy experts encapsulate the country’s international stance today in a book title? I asked the heads of four research centres.

The US Studies Centre’s Mike Green, referencing Geoffrey Blainey’s famous Tyranny of Distance, proposed The Tyranny of Disinterest. Why? He suggested that Albanese lacks interest in the China threat and that Trump lacks interest in the liberal world order.

The Australian Strategic Policy Institute’s Justin Bassi came up with Letting Others Decide. Why? “Avoiding hard conversations with Trump,” he elaborates. “Avoiding criticism of Beijing. Avoiding investing in defence that would actually give us some leverage. That means we’re drifting, neither to safety nor nowhere but into rocky trouble.”

Drift was also on the mind of Rory Medcalf of the ANU’s National Security College. His title: Continental Drift.

The Lowy Institute’s Michael Fullilove, in counterpoint to Blainey’s book, proposes The Predicament of Proximity. Meaning? “We are closer to the world’s booming markets – and closer to the world’s future crises. We are less isolated – and less insulated. We have to decide whether we want to be a spectator or a participant.”

It’s striking that all four see a country that is too inert, a government that must get more active. One of Mao’s catchphrases: “World in great chaos – excellent situation.” Only for those able and willing to take advantage. That’s pressure with no clear release.

Peter Hartcher is political editor.