Foreign Relations - China

China is Australia’s biggest trading partner, and its future prosperity depends, in large part, on a smooth relationship with Beijing. Australia, however, must balance its commercial ties with China with its longstanding military alliance with the United States.

Tensions between Canberra and Beijing have risen because of allegations of cyber attacks by China, and that it has meddled in Australia's domestic politics. There's also been friction over the detention of a Chinese-Australian writer in Beijing, and differences over Chinese territorial claims in the South China Sea. Australia also has concerns about Chinese interference in its universities, including allegations that students who have supported democracy protests in Hong Kong have been harassed or monitored by Chinese agents on campus.

In the wake of the 15 September 2021 trilateral AUKUS security partnership between Australia, the UK and the USA, Global Times editorialized " no matter how Australia arms itself, it is still a running dog of the US. We advise Canberra not to think that it has the capability to intimidate China if it acquires nuclear-powered submarines and offensive missiles. If Australia dares to provoke China more blatantly because of that, or even find fault militarily, China will certainly punish it with no mercy.

"As Australia participates in the US-led strategic siege of China, it should remain self-aware and take a position that matches its strength. If it acts with bravado to show its allegiance to the US and takes the most prominent position in the US' anti-China strategy, especially by being militarily assertive, then Canberra will most likely become a target of Beijing's countermeasures so as to send a warning to others. Thus, Australian troops are also most likely to be the first batch of Western soldiers to waste their lives in the South China Sea."

One of Australia's most senior government ministers, Home Affairs Minister Peter Dutton warned 12 October 2019 Canberra would work to counter foreign interference in Australian universities, as well as cyber espionage. Peter Dutton's comments are some of the most uncompromising language yet from an Australian government minister on the perceived threat posed by China.

"My issue is with the Communist Party of China and their policies to the extent that they are inconsistent with our own values, and in a democracy like ours we encourage freedom of speech, freedom of the expression of thought, and if that is being impinged, if people are operating outside of the law then whether they are from China or from any other country we are right to call that out," he said.

The comments prompted a stinging response from the Chinese government. A Foreign Ministry spokesman, Geng Shuang, told a press conference that he hoped "Australia will reject the Cold War mentality and bias, and work to advance bilateral relations and mutual trust." The Chinese Embassy in Canberra said it rejected "Mr Dutton's irrational accusations … which are shocking and baseless."

The United States expressed concern about China's influence in Australia’s domestic politics and wanted reforms to eliminate Beijing’s ability to use financial donations to influence Australian politicians. In an exclusive interview 15 September 2016 with the daily newspaper The Australian, departing U.S. Ambassador John Berry said he was worried about China's influence in Australia’s domestic politics. Berry said the United States objected to Beijing's ability to advance its interests by funding Australian politicians during an election campaign and said Washington was "surprised" at the extent of the involvement of the Chinese government in Australian politics. He said the United States hoped Canberra will protect Australia's "core responsibilities against undue influence from governments that do not share our values."

The ambassador's comments followed the resignation of opposition Labor senator Sam Dastyari, who had asked a company connected to the Chinese government to pay part of a travel bill. The affair prompted a widespread discussion about the influence that foreign financial donors are having on Australian lawmakers. Both major parties in Australia have received hundreds of thousands of dollars from donors with overseas interests. Members of the opposition Labor party and the Australian Greens believe it was time to ban such practices.

The Spokesperson of the Chinese Embassy in Australia responded to Reports in The Australian about an Interview with a Senior US Diplomat 15 September 2016: "We have noted reports in The Australian on 14 September about an interview with a senior US diplomat. We are surprised by his irresponsible allegations against China, which is regrettable. China follows the principle of non-interference in the internal affairs of other countries. Allegations regarding the Chinese government's involvement in political donations in Australia are totally made up out of thin air and politically motivated. There are always some people in this world who seem to have a habit of lecturing other countries on their domestic or foreign policies. Such an approach obviously runs counter to the historical trend in today's world. We are committed to developing constructive relations characterized by mutual respect, mutual benefit and win-win cooperation with Australia, the United States and countries throughout the world."

Australia attributes the reason for China's military modernization to its determination to deter Taiwan from becoming independent, including by developing the capability to deter or delay the United States from coming to Taiwan's aid militarily. It also concludes that China's longer-term agenda is to develop "comprehensive national power," including a strong military, that is in keeping with its view of itself as a great power.

Australia underscored the potential for misconceptions that might lead to a crisis, citing such factors as China's antipathy towards tranparency, the possibility it could overestimate its military capability, and the confluence of China's rising nationalism, prediliction for strategic deception, and difficulties with Japan and Taiwan.

In 2009 state-owned company China Non-Ferrous Metal Mining Corporation (CNMC) sought to buy a controlling stake in Australian rare earth company Lynas, which manages one of only two globally significant projects outside of China. The Foreign Investment Review Board extended its review of the proposal, given that China already controls 97% of global rare earths. Lynas was positioning itself as an alternative supplier to Chinese companies before the global financial crisis. But financing difficulties forced the company to turn to foreign investors for funding in order to complete construction of the Mount Weld project. The collection of elements called rare earths -- essential ingredients in advanced weaponry, fighter jets and radar equipment -- takes place in China. Chinese control of the global supply of rare earths means that the Chinese government could influence access to supply. Concerns in the US over security for the supply of these minerals prompted the filing of a WTO case against China in June 2009 for imposing export quotas on rare earths.

When Australia ran into economic difficulties in 2008, it was China's robust demand that had ushered in a mining boom for the country. Australia was among the lucky few that had gone through the global financial crisis unscathed. When the global economy was confronted with yet another challenge in 2013, it was negotiations on free trade agreements like ChAFTA that had lent fresh impetus to the Australian economy.

Australia’s relations with China, as diverse as they have become, rely on strong political foundations. This was a key motivation in seeking to establish a regular dialogue between leaders. This ambition was realised in 2013 when China and Australia agreed to establish an annual Leaders Meeting Mechanism as well as annual dialogues between Foreign Ministers and between economic ministers. Since then there were successful high-level visits in 2014 – with two Prime Ministerial visits to China and the visit to Australia by President Xi. This momentum continued into 2015 with the Governor-General’s visit in March.

President Xi Jinping's state visit to Australia was broadly recognized as a very successful historic visit that had helped the two countries establish a comprehensive strategic partnership, marking a new high in relations. On 19 November 2014, when President Xi was about to leave Sydney concluding his state visit, he said that China-Australia relations had never been better.

China is carrying out the "One Belt, One Road" initiative in partnership with Australia. China-Australia relationship is well beyond business. This relationship is growing on a solid basis of people-to-people links. By May 2015, there has been over one million Chinese tourist visiting Australia. More than 240,000 Chinese students are studying in Australia. Under the New Colombo Plan, more than 500 Australian students are sent to study in China.

The Australian government engaged in the development of the AIIB as a prospective founding member with the objective of ensuring that the new Bank had appropriate governance arrangements, including an active and empowered Board of Directors and the ability to protect the interests of minority shareholders.

China-Australia mil-to-mil exchanges are also growing rapidly. The Chinese and Australian soldiers who finished the "Panderoo" joint exercise could share the story on how military engagement could help build mutual trust.

Regionally, Australia had a shared interest with China in preserving the peace and stability that allowed the Asia Pacific to benefit from decades of development and growing prosperity. As this growth continues, the region found itself experiencing a period of profound transition. Transitions of economic power led to shifting strategic weight, with China’s extraordinary economic growth very much at the center of this.

China’s was been, and would continue to be, of tremendous benefit to the region and the world. But China’s rise was also affecting how people in the region viewed the strategic environment. China’s size, economic weight, and geographical proximity meant people naturally wanted to know what kind of power China will become.

For decades, the US provided the security which has allowed governments in the region to focus their efforts on economic growth and improving the opportunities and standard of living their citizens can enjoy. How China and the US relate to each other, pursue their shared interests, and manage their differences, will be consequential for all in the region.

China's ongoing efforts to reinforce a vital bilateral relationship continued amid growing diplomatic uncertainty in the region. Beijing's move to maintain strong ties with Canberra came as the international community attempted to contend with Donald Trump's erratic presence on the global stage. Australia was only one of the few countries to have officially established a prime-ministerial level dialogue with China, beginning in 2013. Chinese Premier Li Keqiang arrives in Canberra in March 2017. Li was the most senior Chinese official to visit Australia since 2014, when President Xi Jinping finalized a major bilateral trade deal.

China is Australia's largest trading partner, with bilateral trade exceeding $107 billion (99.5 billion euros) and bilateral investment over $100 billion, while Australia is also an important source of resources for a developing China. China is already Australia's biggest overseas customer, buying double the value of goods and services than Japan does in second place. China also delivers Australia its biggest trade surplus. For a whole range of sectors, from tourism, education, beef to wine, the rise of China's middle class is the best news on Australia's economic horizon.

It was clear that China viewed Trump's isolationist tendencies as an opportunity to consolidate its centrality to economic relationships in the region through its own initiatives like the Asian Infrastructure Investment Bank (AIIB), 'One Belt One Road' (OBOR) and the Regional Comprehensive Economic Partnership (RCEP). Australia had signaled its interest in each of these initiatives and it would perhaps become more important with Trump's withdrawal from the TPP.

The Australian government supported the June 2016 South China Sea arbitration decision, much to the annoyance of China. But it also joined the Asian Infrastructure Investment Ban and sold an important maritime port in Northern Australia to a Chinese company, much to the annoyance of the US.

China's ability this far to challenge international law and US hegemony through its island building and naval operation in the South China Sea is seen in Australia as damaging to the 'rules based' international order that Australia sees as critical to its national security and prosperity.