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Chinese - Australian Conflict and Trade Relations. Is There Any Bright Future?
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Chinese - Australian Conflict and Trade Relations. Is There Any Bright Future?


In the middle of the last decade, Australia's partnership with China was considered exceptionally strong. Yet, in just three years, Australian - Chinese trade relations status has become a symbol of difficulties with neighbors. Despite being an ally of the United States and a close military partner in all US global intervention initiatives, Australia has shown exceptional enthusiasm for working with China since the end of the Cold War. Trade flourished as China became Australia's most important export destination. The growing presence of the Chinese diaspora in Australia, the flow of students and tourists, the expansion of consultations on regional and international issues, and the increased comfort of political interaction between the Australian political establishment and China have made Canberra an essential strategic partner for Beijing.

The sharp decline in Australia - China trade relations since 2018 reminds us of some features of international relations that should be remembered due to the narrow focus on state power and its uneven distribution among countries as critical factors shaping the behavior of nation-states. Significant power asymmetries do not automatically imply the ability to influence the actions of a weaker power. Consideration should be given to the strength of national resistance and unity and the many international opportunities for a weaker nation to counter threats from large states. The status of Chinese - Australian relationships demonstrates the danger of the unintended consequences and unwanted results of incredible power arrogance and reckless diplomacy.

History of Australia-China Diplomatic Tensions

Even by 2018, it appeared like Australia - China trade relations were on the verge of reaching their worst state in a decade. Now, the relationship between the two nations has worsened at a crucial juncture for the region.

Australia-China relations hit new lows in 2020, with unheard-of repercussions for trade and other economic connections.

While there were problems earlier, on April 19, 2020, the Morrison government stepped up the ante by suggesting an international inquiry into how China handled the COVID-19 outbreak in Wuhan. The Chinese government instantly reacted negatively to this, which may have been done on purpose to imply that China may be to blame for the global pandemic.
Australia-China relations have since become involved in growing trade conflicts. China has been enforcing several trade restrictions against Australian goods since May 2020.
Due to "public health concerns in the global pandemic" or "quota restrictions," limitations were placed on Australian beef, barley, cotton, thermal coal, lumber, copper, and lobster imports. Higher tariffs were imposed on other Australian goods like wine as part of the sanctions.
The Chinese embassy in Australia and the Chinese Ministry of Culture and Tourism issued several travel warnings in June, significantly harming the Australian economy. Due to an alarming rise in racist attacks against Chinese and Asian individuals, Chinese officials warned their fellow citizens not to visit or study in Australia.

Trade relations between Australian and Chinese businesses

Due to the significant harm caused by these policies to Australia's agricultural, mining, manufacturing, tourism, and higher education sectors, the Australian government decided to keep charging anti-dumping taxes on imports from China.

Introducing stricter regulations for foreign investment in sensitive assets was interpreted as a move against Chinese investment in Australia, which hampered state or academic cooperation with China. In December, when Australia filed a complaint against China with the World Trade Organization, the back-and-forth heated up even more.

Australia-China diplomatic tensions between the two countries have risen with commercial tensions. The Morrison administration pledged in July to give Hong Kong citizens a "safe haven" as China began enforcing its national security regulations in the city.
The Chinese embassy in Australia responded by denouncing the government's political meddling in what it called China's internal affairs.

Since June, Australia has also been revoking Chinese scholar visas and targeting Chinese media officials in Canberra to eliminate Chinese political interference in Australia.
Bill Birtles and Mike Smith, two Australian journalists, were investigated by Chinese national security in September, compelling them to leave China. At the same time, it was claimed that several Australian citizens were being arbitrarily arrested in China.

Then, in November, a Chinese spokesperson for foreign affairs, Zhao Lijian, criticized the behaviour of Australian soldiers in Afghanistan by posting a controversial doctored picture of an Australian soldier holding a knife to a child in Afghanistan on his official Twitter account. Later, Australia asked China to apologize but got no answer.

The hazardous "drums of war" narrative, which has been pumped up by some Australian media outlets since April 2020 and has recently been reiterated, hangs over these bilateral and diplomatic disagreements. The fact that this was even a possibility clearly indicates the mounting tension.

That both countries have been taking this more aggressive approach to their public announcements shows they are willing to risk further escalating tension in return for showing strength. That mutual economic benefits cede to national political and ideological interests in this discourse shows there may be a danger to come.

The Status of Australian - Chinese Trade Relations

After a long diplomatic freeze, Australian Prime Minister Anthony Albanese and Chinese President Xi Jinping finally met on November 15, 2022, at the G20 conference in Indonesia. The two leaders had met in person since 2016 at this event. They discussed trade and agreed that their economies were "extremely complimentary."

The restrictions on Australian exports worth A$20 billion (US$13.4 billion) remain in place, despite the meeting being widely perceived as a thawing in bilateral relations. Additionally, there has yet to be any improvement in the circumstances that would make it easier for Chinese companies to invest in Australia. Australian lawmakers' recent trip to Taiwan in December added a new, melancholy aspect to Australian - Chinese trade relations.

"The Australian government's relationship with China will remain challenging," Albanese warned earlier this year. Canberra may even apply higher taxes on Chinese imports, given the country's Labor government's objective to revive Australia's manufacturing sector. As geopolitical tension between China and the West increases, Australia may also choose to side with the US and Canada regarding the security of essential minerals, thus reducing the possibility of commerce with China.
However, despite these tensions and trade restrictions on selected products, China still counts for more than 35 per cent of Australian exports and 20 per cent of imports. Moreover, iron ore, wool, and gas were not hit by the sanctions, and many of Australia's largest companies continued to benefit from Chinese exports. The sheer size of trade with China was three times higher than that with the US. Australia and China also have shared interests in a range of trade-related matters, such as e-commerce, sustainability, and climate change. For example, Western Australia is working to step up its space research cooperation with China.

Investment Prospects in China in 2023

With the size and diversity of its economy, China still stands as a significant investment destination for Australia. With the gradual opening up and relaxation of COVID restrictions in China, the Chinese public interest in tourism and overseas education will spring back.
In addition to existing markets in agricultural goods, natural resources, and wool, there are more opportunities with changes in the Chinese economy. For one, the Chinese market for more advanced goods and services of high quality will likely expand.

Rising wages and growing consumer needs for quality products will increase demand for more sophisticated manufactured goods and services. Australia's expertise in medical devices, human resources, urban development, and financing offers immense potential for exports and investments.

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