‘Mature’ China engagement can break impasse, says Scott Morrison

Scott Morrison has urged China to engage ‘maturely’ with Australia to resolve the toxic impasse between the countries.

Scott Morrison meets with Chinese President Xi Jinping at the G20 summit in Osaka, Japan, in 2019. Picture: Adam Taylor / PMO

Scott Morrison has urged China to engage “maturely” with Australia to resolve the toxic impasse between the countries, as the mid-year budget update forecast a bounce in resources and farm exports next year despite the ongoing trade tensions.

The Mid-Year-Financial Update forecast a 5 per cent jump in resources trade and a 2.5 per cent increase in farm exports during 2021-22.

MYEFO also predicted an easing in the iron ore price to $55/tonne from a near seven-year high of $155, reflecting expectations of a potential settling in trade tensions.

Treasurer Josh Frydenberg said the budget update reflected updated agriculture and resources data to factor in Chinese trade sanctions, which so far have hit more than $20bn of Australian goods, including coal and beef.

“We’ve taken into account some of the current trade tensions with China,” he said. “But even that being said, given our access to other markets, the volume of our exports can continue to increase in the years ahead.”

A day after the government revealed Australia would challenge Beijing’s 80 per cent barley tariff at the World Trade Organisation, the Prime Minister – who has not spoken to Xi Jinping since June 2019 – said the countries needed to return to productive dialogue.

“It’s important for us to maturely discuss the issues that are present,” he said. “But it’s also important Australia continues to act in its own interests, in our national interests, in our sovereign interests, and we’ll of course do that.”

He described the relationship between the two countries as “mutually beneficial” – adopting a Chinese characterisation that was typical prior to recent tensions – and declared the impasse was of “no value to China or Australia”.

His comments came as former trade minister Andrew Robb, who signed the China-Australia Free Trade Agreement in 2015, said there was a “way forward”.

“We’ve got to be patient and … focus on the positives and the complementary nature of our trading relationship,” he told ABC radio.

But a new “Allied Strategy for China” paper by US-based think tank the Atlantic Council, urged a different approach – collective action by democracies to make Beijing “feel the pain” of its unfair economic practices.

The paper, designed to influence the incoming Biden administration, said like-minded countries needed to work together to “impose costs on Beijing’s ongoing violations of core principles of the rules-based system”.

“If China places restrictions on goods or services entering its market, then leading countries should do the same to Chinese goods and services,” it said.

“Leading countries should co-ordinate their measures. They will be in a stronger position if they are united on one side of the trade negotiating table, with China isolated on the other.”

It recommended like-minded allies put in place measures to defend against Chinese interference in their societies, and impose costs on the Chinese Communist Party for gross human-rights violations.

It said the active participation of powerful democracies was critical, including the so-called Democratic Ten: the US, Japan, Germany, the UK, France, Italy, Canada, South Korea and Australia, plus the European Union.