Penny Wong is right to be cautious on trade thaw with Beijing

Foreign Minister and Acting Prime Minister Penny Wong is right to remain cautious about what a potential thaw in trade relations with China means for Australian exporters and the nation. Renewed diplomatic efforts to repair a breakdown that has affected $20bn worth of exports across a range of commodities is welcome.

But the reality, as Senator Wong has noted, is that China is not the same trading partner it was during the Howard years, and businesses would be wise to continue to diversify their export markets in anticipation of further shocks.

The global picture is unambiguous. The trading world is in realignment as China seeks to position itself as an alternative power to the US for countries that do not share the same world view. This includes the big energy powers Russia and Saudi Arabia, Iran and large parts of Africa. For Australia, a visit by China’s Executive Vice-Minister for Foreign Affairs Ma Zhaoxu has provided an opportunity to walk back a dispute over barley that was approaching decision time in the World Trade Organisation.

Both sides have agreed to press hold on the WTO action and fast-track a resolution. China has said it is ready to work with Australia. Chinese foreign ministry spokesman Wang Wenbin said by “following the principles of mutual respect, mutual benefit and seeking common ground while shelving differences, China aims to re-establish trust between the two countries and bring bilateral relations to the right track and, in this process, resolve our respective concerns on trade and economic issues in a balanced way through constructive consultation to the benefit of both peoples.”

Senator Wong said the thaw in relations could extend to a resumption of wine exports as well as barley. But we are preserving our right to restart our case in the WTO if no progress is made across the next four months. Senator Wong has taken a realistic approach in arguing that exporters must keep their options open. She said it was vital to recognise that times had changed when it came to dealing with China on trade.

The new reality is it is no longer possible to separate our economic and strategic relationships and perspectives. “That world has changed,” Senator Wong said. In response, producers must diversify their export markets in the interests of national resilience.

Senator Wong’s tone sends the right message that Australia is fully aware of Beijing’s willingness to use trade coercion to further its geo-strategic interests. This has been true not only for Australia but also for Lithuania and other countries prepared to stand up to Beijing’s bullying.

The Chinese Communist Party’s abrasive actions under Xi Jinping have resulted in closer co-operation between allies concerned about the rise of authoritarian states in the wake of Russia’s invasion of Ukraine. The invitation for Anthony Albanese to attend the NATO summit in Lithuania in July together with leaders from Japan, South Korea and New Zealand is reflective of the strengthening of global coalitions.

On trade, Mr Xi has emerged from years of Covid isolation to promote a new security and business alliance with nations that are wary of US global dominance. Beijing’s outreach extends to Australia, with Trade Minister Don Farrell expected to visit Beijing imminently and the Prime Minister ready to accept a formal invitation. Victorian Premier Daniel Andrews has visited Beijing and West Australian Premier Mark McGowan is scheduled to visit next week.

Throughout Beijing’s period of displeasure, Australia has been willing to maintain normal relations, including meetings at the most senior government levels. But we will not compromise our values and we return to dialogue, as Senator Wong has shown, wiser for the experience.