Albanese spends week praising regime behind ‘most dangerous strategic circumstances in 80 years’
Anthony Albanese’s self-indulgent visit was propaganda gold for Beijing but did nothing for our interests.
In terms of Australia’s national interests, Anthony Albanese made a huge mistake in conducting such a high-profile, lengthy, substance-free trip to the People’s Republic of China.
Australia got nothing from the trip, not a single concession to any of our interests. Beijing got everything it wanted.
It was a characteristic Australian mess, falling for flattery and flim-flam while neglecting key national interests. The visit lacked substance but was propaganda gold for Beijing.
The timing was terrible. It badly distorted Australian diplomacy. And six days – the longest single visit to any nation by the Prime Minister – was simultaneously cringingly subservient and foolishly self-indulgent.
The single biggest economic issue didn’t get a mention at all. That is Beijing’s predatory pricing and wholesale destruction of Australian industries through industrial policies that make a mockery of the international trading system.
Albanese has rightly criticised Donald Trump’s tariff unilateralism. He hasn’t said a word about Beijing’s practice of massively subsidising industries, selling products below costs, until competitors are driven out of business and it can pitch prices at any level it likes.
This is not only an economic disaster, it also is increasingly a strategic threat, as rare earths and critical minerals demonstrate.
But before we leave the big picture, consider this visit in the round.
Albanese went to the PRC having been unable to meet Trump. Trump is surely a difficult president. But Australia has core interests with the US far beyond any we have in Beijing. Whatever Albanese thinks of Trump personally, he has an obligation to manage the US relationship in Australia’s national interest. Trump cancelled a scheduled meeting with Albanese. It’s impossible to believe that if Albanese made a proper government to government request to meet Trump in Washington, this would be denied.
Naturally Trump would raise Australia’s laughable defence budget. If Albanese actually believes 2 per cent of GDP is adequate, he’d be the only person on the planet to do so, though of course Beijing is delighted that Albanese followed its advice to spurn the Trump administration’s call to do more in defence.
Either way, Albanese should be willing to talk to Trump about it. He needs to have an agenda for Trump. In a hugely asymmetric relationship like that between Washington and Canberra, the initiative mostly lies with the smaller partner.
Meanwhile, the AUKUS agreement is in obvious trouble, and Albanese is unable to argue its merits in Washington or to the Australian people, much less to the leadership in Beijing. Hugging pandas in Chengdu, striding in Gough Whitlam’s fatuous footsteps along the Great Wall of the People and demonstrating tennis skills, are no doubt more agreeable than trying to rescue AUKUS in the US, but they’re not a legitimate priority for an Australian leader. The timing of the Beijing frolic was dismal. So was its structure. In northeast Asia there are two nations with which we share profound values and interests, Japan and South Korea. A swing of six days could have been divided between these nations and the PRC.
Instead, the Prime Minister spent the week praising the wonders of the regime that has created what so many Albanese government officials and appointees have told us are our most dangerous strategic circumstances in 80 years.
While Albanese was in Beijing, the Australia-US joint military exercise Talisman Sabre was being conducted around northern Australia. Australia’s elderly defence assets – undergunned and antique Anzac-class frigates, for example – have become so feeble they mostly can’t be sent into war zones. But they can exercise militarily. The purpose of Talisman Sabre is to enhance allied interoperability and to signal to others – mainly Beijing – steadfast resolve and deterrence.
The failure to mention the key issue of Beijing’s predatory pricing and the failure to secure a single concession of any consequence from Beijing demonstrated the resolve of a marshmallow suffering a crisis of confidence.
Albanese failed to win the release of wrongly imprisoned Australian writer Yang Hengjun, preposterously charged with espionage and detained more than six years. He failed to win the slightest undertaking of better conduct from the PRC in its live-fire navy exercises conducted without notice to Australia, and its other aggressive military actions.
Albanese was perhaps embarrassed into having to raise these issues publicly at all. In Australia, and even in Beijing, he constantly argued the PRC navy was operating within maritime law.
This is a foolish distinction. It’s possible to be intensely intimidating and conduct highly dangerous manoeuvres while technically staying within the law.
Which genius decided to have this visit while Talisman Sabre was unfolding? The truth is, nobody sees the PRC President, Xi Jinping, at a time of their choosing. If you get to see the PRC President, it’s at a time the President chooses. The Beijing bureaucracy choreographs state visits meticulously. Perhaps Beijing decided, exquisitely, to host this visit while Australia’s military exercises were under way.
The visit was much disrupted by the occasional hint and question from US Under Secretary of Defence for Policy Elbridge Colby, who is conducting a review into AUKUS.
Colby is rightly concerned that his own nation, the US, is failing to build nuclear submarines fast enough to credibly sell three to five to Australia in the 2030s. He’s concerned Australia’s preparation for AUKUS is inadequate and our dismal defence budget indicates a lack of seriousness.
There has been much controversy about Colby apparently asking Canberra what it would do if the US were involved in military conflict with Beijing in defence of Taiwan. If Colby is asking Canberra to commit in advance to going to war in hypothetical future circumstances, his request is absurd and unreasonable.
However, while we know Colby has had some pretty unsatisfactory meetings with Australian officials, we don’t know exactly what he’s asking.
It may be there’s a more subtle and limited request involved.
A disturbing paper in considering this comes from a former deputy assistant secretary of state under George W. Bush, Evan Feigenbaum, now vice-president for studies at the Carnegie Endowment for International Peace.
In Beneath the Mateship, a Quiet Crisis is Brewing in the US-Australia Alliance, Feigenbaum praises growing co-operation between the two allies over many years. But now, he says, there are serious conflicts of expectation that could easily lead to crisis. The first is the Trump administration cannot accept that Australia, unlike every other serious US ally, spends only 2 per cent of GDP on defence.
Though Feigenbaum is full of goodwill for Australia, he concludes Canberra must spend more because “Australia under its current budget cannot afford both the full scope of investments envisioned under AUKUS and the other needed investments in conventional capabilities”.
He also sees disagreement over precommitment on Taiwan. US military planners naturally include all their military assets located in Australia when they plan for any contingency involving US forces in the Indo-Pacific, especially over Taiwan. However, no Australian government would cede sovereignty by writing a blank cheque of precommitment.
Another difficulty is over Australia’s military geography, which is relevant to northeast Asia, but Australians may see that as far away.
Next is US force posture. In any conflict the US would seek greater access to Australian facilities. Feigenbaum acidly notes the vagueness with which Australian defence documents talk of contributing to US-led deterrence without ever saying what that might mean. Feigenbaum is too polite to say it, but Albanese government speeches referencing deterrence are even vaguer.
Finally, Feigenbaum nominates “coalitional defence”. Australian attitudes to helping Washington in any conflict will depend on how broad a coalition the US has built. Yet such coalition building seems antithetical to Trump.
Feigenbaum contrasts the US-Australia alliance with the US-Japan relationship where operational roles in potential conflict are well thought through in advance. Feigenbaum sees danger in the public spat between US Defence Secretary Pete Hegseth, who called for Australia to lift defence spending to 3.5 per cent of GDP, and Albanese, who tartly replied Australia would make its own decisions. That appealed nationalistically but typically avoided all substance. Feigenbaum suggests there “has been too much rah-rah and too little intellectually honest self-reflection”.
Feigenbaum is encouraged, however, by the Australian Chief of the Defence Force, Admiral David Johnston, who told a recent conference: “Perhaps finally we are having to reconsider Australia as a homeland from which we will conduct combat operations.”
If Australia were waging combat from its own territory, who would we possibly be fighting beside and who would we possibly be fighting against?
Article IV in the ANZUS Treaty states that any attack in the Pacific area on a member nation would be dangerous to all treaty parties and each would “act to meet the common danger in accordance with its constitutional processes”. Then Article V says: “an attack on any of the Parties is deemed to include an attack on … its armed forces”. ANZUS would thus cover a PRC attack on US forces going to help Taiwan.
No treaty actually pre-commits a nation to war. If Russia invaded Estonia tomorrow, fellow NATO members such as Britain or Spain, or especially the US, would still have to make a decision to take military action or not. We know Colby has had some unhappy meetings with Australian officials, but we don’t know exactly what he said. If he’s calling for more integrated joint planning for the possibility of conflict, that’s reasonable.
All militaries, including Australia’s, have many plans they hope never to implement. Having the plan doesn’t mean any government’s decision has been made for it in advance. It just means the military can act effectively if government tells it to.
It may be Colby is forcing us to confront several dimensions of reality we routinely avoid. We’ll certainly get no enlightenment or leadership on anything like this from the Albanese government. That Albanese feels no inclination to lead an AUKUS conversation but would rather be hugging pandas is a sign of poor priorities.
There was nothing of any consequence achieved for Australia in this visit. The so-called economic side of the trip was a mixture of fantasy, farce and harmless jawboning. The fantastical idea that we will one day sell green iron and green steel to the PRC, which will pay a premium so it can get closer to meeting net zero emissions in 2060, has no purchase on reality.
You can see why business would go along with it, though: better keep onside with governments and their ephemeral rhetoric, there may well be big subsidies on offer, and so on.
Meanwhile the PRC is deliberately destroying Australian industries through predatory pricing. The PRC, much more than Trump, has destroyed the global trading system. Brendan Pearson, former Australian ambassador to the OECD, wrote this week that the OECD estimates Beijing subsidises its manufacturers 10 times more heavily than Western nations subsidise their manufacturers. The OECD further estimates that by 2030 the PRC will control 45 per cent of global manufacturing.
The PRC method is simple. It identifies one strategic sector after another. With concessional financing from state banks, below-market energy prices, reduced costs for all manner of business inputs, plus the guaranteed home market, PRC companies can always undercut their competitors. No Western firm can ever meet the “China price”. When competitors are driven out of business, PRC companies move the price back to profitable levels.
By then they own the market. Deindustrialisation caused by the PRC has hollowed out the economies of European nations and the US. In exchange, these societies have got cheap Chinese goods. Australia also suffered this process, but we gave up manufacturing long ago. Now, manufacturing accounts for only 5 per cent of our economy, one of the lowest levels in the OECD.
While this deindustrialisation has been socially harmful and economically damaging, it also has big strategic consequences, especially in strategic industries.
Nothing is more strategic than rare earths and critical minerals. These are essential for countless hi-tech applications, including many military technologies. A substantial quantity is needed to make the high-performance magnets that go into our F-35 air force fighters. The PRC completely dominates this trade and has forced other suppliers out of business.
Former prime minister Scott Morrison tells Inquirer: “China massively subsidises production to block out competitors and this gives them their dominant position. This is exactly what China has done on critical minerals and rare earths for 20 years. China’s plan is to dominate, control the price, block out rivals.”
This process was evident in the devastation of the Australian nickel industry and in the extreme challenges and costs Australia is encountering trying to develop its rare earths industry.
Morrison, freed from office, speaks plainly, but he’s not making a partisan point. Resources Minister Madeleine King, in commenting on the closure of BHP’s nickel operation in Western Australia, said: “Because of an opaque market and a combination of Chinese investment of gargantuan proportion into Indonesia nickel mines … there was a steep decline in nickel prices which led to the closure of Nickel West.”
The nickel refining processes the PRC used in Indonesia are hugely energy intensive. For those still clinging to the fantasy of Beijing as a hero of net zero, it’s droll to note Beijing financed coal-fired power stations in Indonesia to power nickel operations. Beijing floods the market when a competitor looks as though it will establish a beachhead. This makes the competitor unprofitable and convinces investors the sector’s too risky.
A huge worldwide copper shortage is forecast as copper is central in electricity and the great decarbonisation requires vast new electricity supplies. Yet Townsville’s copper smelter could go out of business. The Albanese government is stumping up billions of dollars in subsidies to smelters and refineries.
Former resources minister Matt Canavan (how can the opposition allow him not to be on the frontbench?) tells Inquirer: “China has a clear strategy to monopolise key industrial commodities. They have already done it to nickel, which cost 10,000 Australian jobs. We need to fight back and protect other key metals industries before we lose more jobs to China.” He estimates another 6000 Australian jobs are directly at risk right now because of Beijing’s predatory practices.
In an important paper for the Washington-based Centre for Strategic and International Studies, Gracelin Baskaran demonstrates how Beijing drove down the price of nickel, lithium and neodymium-praseodymium oxide, the critical rare earth involved in high-performance magnets, to drive competitors out of the market. She thinks the only effective response is for the US and its allies to establish an “anchor market” that allies rare earths.
Morrison makes a similar argument: “The only way around it is to set up a secure supply chain with a guaranteed price. I would say to the US that co-operating with friends and allies works well in producing military security; co-operating with friends and allies would work well in producing economic security.”
Asked to compare his time as prime minister with today, Morrison says: “China’s plan back then was to isolate us from the US by bullying us. Their plan now is to isolate us from the US by charming and flattering us.”
Rare earths are so expensive partly because while digging them up is easy enough, transforming them into usable metals is extremely challenging technically.
The problem with what both Morrison and Baskaran propose is that Trump has shown little ability to rally and organise allies. His trade actions have been scattergun and not discriminated between US allies and strategic competitors.
Albanese has plenty of criticism of Trump’s trade policy but nothing to say, in Beijing or in Australia, about PRC industrial policies that wipe out whole Australian industries. You’d think between gushing about pandas and performing devotions to Gough it might be worth a sentence or two.
Similarly, while official Australian policy, even today, is aimed at diversifying trade, this trip, if it has any effect on trade at all, will intensify Australian dependence on China. We have failed at trade diversification, which is one reason Albanese should be in Japan, South Korea and India. But Beijing is diversifying away from us.
In 2023-24, our iron ore exports were worth $138bn, a fifth of our total exports. Iron ore, coal and gas between them constitute nearly half our total exports, making us a dangerously narrow economy.
Beijing will move away from Australian iron ore as soon as it can, whatever fantasies it spins Albanese. Beijing now controls Simandou mine in Guinea that will come online this year. It has invested in a lot of African mines. The move away from Australian iron ore will probably be slow, gradual and remorseless. It takes time to build up new supplies. And the Pilbara is a kind of iron ore logistics paradise. But the trends are moving against Australia.
With apologies to Johnny Mercer, Albanese’s self-indulgent and at times fatuous homage to the PRC did nothing to eliminate the negatives, accentuate the (real) positives or latch on to the (Australian) affirmative. Instead it was all about “Mr Inbetween”. Wholly befitting a nation that sleeps while history marches.
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