What Price Stability? Anthony Albanese’s Australia-China Accord

In October 2023, Australia’s Prime Minister Anthony Albanese announced he would visit China from November 4-7 to mark the 50th anniversary of Labor Prime Minister Gough Whitlam’s visit in 1973, the first by an Australian prime minister. Confirmation of the visit has been greeted with relief in Australia’s policy circles. There was a time not long ago when it was considered a matter of course for an Australian prime minister to visit China at least once during a term in office. By 2023 relations had deteriorated to the point where Beijing was maintaining a virtual freeze on high-level government communications along with other measures to coerce Canberra’s compliance. What changed to elicit the invitation from Beijing?

The Albanese Labor government was elected to office in May 2022 in place of a decade-long Liberal/National Coalition government led by three prime ministers in turn: Tony Abbott (2013-15), Malcolm Turnbull (2015-18), and Scott Morrison (2018-22). Abbott and Turnbull each paid a formal visit to China during their terms, as had all seven prime ministers who preceded them extending back to Whitlam’s visit in 1973. Morrison was the odd one out. By the time he took office, relations had tipped into a downward spiral that was accelerated by his call for an independent inquiry into the origins of the Covid-19 pandemic. No invitation was made.

The problem was not Morrison’s doing.  The common ground on which the two countries came together fifty years earlier had long shifted with the end of the Cold War, and the poles on which Australia had balanced its trade and security interests since that time—crudely put, relying on China for trade and the US for military security—were no longer equally poised.  Structurally, something had to give.

Albanese went into the federal election promising to “stabilize” relations with Australia’s largest trading partner while maintaining Australia’s close engagement with allies and partners, including the controversial AUKUS agreement with the U.K. and US on acquiring nuclear-powered submarines. Beijing’s invitation for Albanese to visit suggests his approach is working, although to low expectations. The visit should not be mistaken for a reset, Richard McGregor, senior fellow for East Asia at the Lowy Institute in Sydney, told Voice of America.¹ “We are not going back to what the relationship was previously. But I think it is a big step in the gradual stabilization of the relationship.”

Assuming relations are out of balance, on what foundations have Canberra and Beijing managed to stabilize them? In light of China’s recent restrictions on high-level diplomatic ties, its punishing trade bans, and its published list of fourteen “grievances” to be acknowledged before bilateral relations could be rebalanced, has either side compromised along the way?² This article reviews developments in Australia’s relations with China before and after Albanese came to office, with a focus on national security, defense, and diplomacy, to assess whether the new stability accord entails significant concessions on either side and whether it rests on stable footings. 

Shifting Ground

One measure of how far the ground has shifted since the last prime ministerial visit in 2016 is the intensification of Australia’s defense and security relations with other countries in the region, including Japan, India, the Republic of Korea, and the Philippines. China remains far and away Australia’s largest trading partner, but trade and investment are no longer the primary drivers of Australia’s foreign policy settings, and China is far from the only regional player drawing serious attention in Canberra.

Relations with the Philippines illustrate how far Australia has come in recent years. At the time of the last prime ministerial visit to China in 2016 the Australian government was speaking courteously but openly about the need to resolve competing national claims in the South China Sea through law and arbitration. By chance, Malcom Turnbull’s visit to China in April that year took place a couple of months before the intergovernmental Permanent Court of Arbitration at The Hague dismissed China’s claims to the South China Sea, in a case brought by Philippines against the PRC under the Law of the Sea Treaty.  The tribunal rejected the so-called “nine-dash line” demarking China’s claims and found that China had no right to control resources within it. The ruling further found that China’s claims encroached on the exclusive economic zone of the Philippines.

During his visit, and ahead of the Tribunal’s announcement, Turnbull spoke of the need for lawful resolution of competing claims over disputed maritime territories.³ On his return to Australia his government proved steadfast in its outspoken support for the International Tribunal’s findings. For China this was an issue. In presenting their list of fourteen grievances to the Australian media in 2020, Chinese officials in Canberra complained that Australia was the “first non-literal country to make a statement on the South China Sea to the United Nations.”⁴ That was Turnbull’s doing, along with Foreign Minister Julie Bishop.

For China the issue went deeper. On the Australian side, media exposure of Communist Party United Front activities seeking to marshal Australians to recognize China’s maritime claims, contrary to the Tribunal’s findings, prompted Turnbull to introduce an ambitious legislative slate targeting foreign interference and intelligence in 2017 that further alarmed Beijing.⁵ Then in August 2018 his government banned China’s Huawei on security grounds from participating in the national rollout of 5G mobile infrastructure, an initiative later taken up in North America and Europe.⁶ China’s response to Turnbull’s forthright commitments and initiatives precipitated a decline in relations that extended into the term of his successor, Scott Morrison, and led to a virtual freeze on high-level diplomatic communications and trade bans punishing Australia.

Australia’s stand on the Philippines case reflected a growing concern in Canberra for upholding what it called the international rules-based order, referring to the postwar institutions and norms centered on the UN that were established often at US initiative in the decade following WWII.⁷ Faced with increasing pressure from China to tread quietly around its maritime claims, the federal government adopted protection of the “rules-based order” as a country-agnostic leitmotif for Australian foreign and defense policy from that time forward.

On foreign policy, the shift in the ground underpinning relations with China  was first formalized in the Turnbull government’s 2017 Foreign Policy White Paper.⁸ Conceptually, the 2017 White Paper  repositioned Australian values diplomacy from folkloric national values to universal values and rule of law.⁹ With respect to China, it addressed claims of foreign interference threatening Australia’s sovereignty and security and called for vigilance to “ensure that national decision-making and institutions remain free from foreign interference.” It expressed particular concern over the need for peaceful resolution of competing claims in the South China Sea, characterized as “a major fault line in the regional order,” and promoted “resolution of differences through negotiation based on international law.” It explicitly opposed “the use of disputed features and artificial structures in the South China Sea for military purposes.”

With respect to security and defense, the shifting grounds of bilateral relations were laid out in the Morrison government’s 2020 Defense Strategic Update which identified the changing threat environment in the region and spelled out its implications for Australian defense planning and cooperation.¹⁰ This involved reinvigorating the Quad framework, alongside Japan, India, and the United States, and working more closely at the bilateral and mini-lateral level with like-minded countries in the region.

Defense cooperation with Japan accelerated with the signing of the 2022 joint declaration on security cooperation¹¹ and reciprocal access agreement.¹² Joint defense exercises followed, including the 2023 Yama Sakura exercise¹³ and the trilateral naval exercises with Japan and the United States¹⁴, along with joint strategy and planning sessions at  trilateral defense ministers’ meetings among other arrangements.¹⁵ A similar range of cooperative initiatives were set in train with India, the Republic of Korea, and ASEAN nations, particularly the Philippines.

Australia found India as deeply concerned about Beijing’s “strategic opportunism” as Australia.¹⁶ The lesson took a while to sink in. In 2008, under pressure from China, Australia withdrew from Malabar Indian Ocean naval exercises with India, Japan, and the US, but then resumed participation in 2020. In 2022 Australia hosted the naval exercises off Sydney for the first time. With trade looming as a security issue for Australia and India, the two countries signed a Free Trade Agreement in April 2022 to “turbocharge our close, longstanding and highly complementary economic relationship in areas such as professional ­services, education and tourism,” according to former Trade Minister Dan Tehan.¹⁷ Another aim is to reduce trade dependence on China.

In 2021, former Defense Minister Peter Dutton held talks with counterparts in the Republic of Korea to boost defense cooperation, and the two countries agreed to enter a trilateral agreement with the US on defense research cooperation. In July 2023, South Korean forces joined Australian, Japanese, and US forces in launching 2023 Exercise Talisman Sabre in Australia, reported to have been one of the largest exercises of its kind held in Australia with over 33,000 troops from 13 participating countries.¹⁸ In June 2023, Canberra awarded South Korean manufacturer Hanwha a contract estimated at A$7b for the  purchase of armored troop-carriers to be built in Australia, for the first time cementing defense-industry links between the two countries.¹⁹ 

The rapid transition underway in Australian security and defense thinking was nowhere more apparent than in the case of expanded defense cooperation with the Philippines. At the time of the International Tribunal ruling on the Philippines case in 2016 Australia had little or no defense cooperation with the Philippines bearing on its maritime territories. Seven years later, in August 2023, the Australian and Philippines governments elevated their relations to a “strategic partnership,” and Australia sent 1,200 troops to take part in a joint military exercise with the Philippines, simulating the recapture of an island occupied by an unnamed hostile power. At the same time, the Albanese government committed the Australian navy to joint naval patrols with the Philippines Navy in the South China Sea.²⁰ These moves followed closely on a joint naval exercise off the West coast of the Philippines involving vessels from the Royal Australian Navy, the US Navy and Japan’s Self Defense Force, all capable of launching aircraft or helicopters for maritime and amphibious defense.

2023 Defense Strategic Review

The growth and intensity of Australia’s security and defense relations with other countries in the region draws attention to the growing structural gap between Australian and Chinese interests and to Australia’s efforts to compensate by expanding defense cooperation. This structural gap and what could be done about it were both spelled out in the Albanese government’s Defense Strategic Review 2023 (DSR).²¹

On taking office the Albanese government confirmed the outgoing government’s assessment of the new threat environment and moved rapidly to reconfigure national defense planning and resourcing in line with the Morrison Government’s 2020 Defense Strategic Update.²² That earlier report highlighted the return of great power competition in the Indo-Pacific region, drew attention to new technologies and their impact on relative military capabilities, and noted the growing use of grey-zone tactics, including economic coercion designed to limit the ability of countries to exercise independent agency. Even before Russia’s abrupt illegal invasion of Ukraine, in February 2022, the 2020 Update abandoned the long-held assumption that Australia enjoyed the luxury of ten years strategic warning ahead of likely conflict and anticipated greater likelihood of high-intensity conflict in the near to medium term. Russia’s invasion of Ukraine further pressed that message home.

Three months into office, Albanese and Defense Minister Richard Marles announced a comprehensive defense strategic review²³ that would pick up where the 2020 Update left off by offering greater detail around revised force structure, posture, and preparedness, and paying particular attention to “investment prioritization to ensure Defense has the right capabilities to meet our growing strategic needs.” Completed less than a year into Albanese’s term, the resulting Defense Strategic Review 2023 (DSR) is widely regarded as the most comprehensive strategic review undertaken since publication of the Review of Australian Defense Capabilities Report (the Dibb Report) almost four decades earlier.²⁴

Few of the assumptions underlying the 1986 Dibb report survived into the 2023 DSR, but Paul Dibb, author of that earlier report, commended the review for planning for a different future from the one he envisaged back then.²⁵ In the 1980s it could safely be assumed that Australia needed the capability to defend against low-level threats from small to middle regional powers and enjoyed sufficient warning time to develop capabilities and posture to meet them. This was no longer the case. In the words of Defense Minister Richard Marles, Australia now faced the ‘’toughest strategic environment the country has encountered in over 70 years.”²⁶ The country had become far more closely integrated into the region over that period, as well, and had developed a fundamental interest in protecting its connections with the region and defending the rules-based order underpinning those connections. The national defense force’s strategy, capability, and posture, Marles said, were no longer fit for purpose.

The 2023 DSR endorsed many of the changes set out in the 2020 Update but went further in calling for a strategy that reached beyond the Department of Defense to adopt a “whole of government approach” involving other Commonwealth departments, parliamentary committees, and state governments. On its outward facing front, the national defense strategy would deploy all elements of national power at the country’s disposal by deepening diplomatic engagement with countries facing similar threats and working with allies and partners to enhance collective security.

On force posture, the DSR concluded that it was “no longer feasible to maintain a broad-based regional capability edge” in view of rapid military modernization elsewhere. It recommended that Australia adopt a more focused force posture building on asymmetric advantages and improved access to a limited range of critical military technologies. The report conceded that changes on this scale required a major shift in defense organization and culture, not least by moving away from established structures framed around land, air, and sea services to an integrated approach centering on domains of conflict. Peter Dean, lead author of the 2023 DSR, told the Center for Strategic and International Studies (CSIS) Asia Chessboard that the Australian army, for example, might need to become more like the US marine corps, capable of integrating land, missile, air, and sea forces.²⁷ Changes on this scale would not come easily, but strategic choices had been made and there was no turning back.

There was no returning either to the days of United States military dominance in the region. The report assumed a relative decline in US military preeminence arising from the rapid economic and military development of other countries in the region, particularly China.  On the DSR’s reading, the relative decline in US military power would not translate into a declining role for America in the Indo-Pacific but cast the United States in a new role as the cornerstone of an integrated regional deterrence strategy, in which Australia played a greater role alongside other allies and partners.

Following public release of an abridged version of the DSR, the Albanese government publicly committed to implementing over 100 of its recommendations, to increase defense expenditure from the current rate of 2.04% of GDP to 2.3% over ten years and, in the immediate term, to focus on six priority areas for immediate action: acquiring nuclear-powered submarines; developing the Defense Force’s ability to strike targets at long-range and to manufacture munitions locally; bolstering the network of northern bases; growing the defense workforce; introducing disruptive new technologies; and deepening defense and diplomatic partnerships in the region.²⁸ In July 2023 it established a new agency to effect rapid  technology transfers into the field, the Advanced Strategic Capabilities Accelerator. Critics allege it has not gone far enough in committing new funds to building integrated capability at the pace and scale envisaged in the DSR.²⁹

Statecraft

Foreign Minster Penny Wong anticipated key elements of the Defense Strategic Review ahead of its release in a major foreign policy speech on “statecraft” to the National Press Club in Canberra in April 2023.³⁰ Her use of the term was a back-handed complement to China’s success in coordinating deployment of comprehensive national power in the service of its competing foreign policy agenda. The Australian government did not support that agenda but, it seems, could not help admiring Beijing’s coordinated application of economic, military, political, diplomatic, and cultural power in pursuit of it.  

There was no point in being shocked or outraged by China’s ambitions or methods, Wong told the press club audience. “A great power like China uses every tool at its disposal to maximize its own resilience and influence—its domestic industry policy; its massive international investment in infrastructure, diplomacy and military capability; access to its markets,” she said.  The challenge for a middle power like Australia was to channel its energy and resources to press its own advantage and deploy all instruments of Australian national power to protect the rules and norms of the postwar rules-based system. To do this Australia needed to deploy statecraft as effectively as China.  

China rated mention several times in Penny Wong’s presentation: for militarizing disputed features in the South China Sea; for forcing dangerous encounters in the air and at sea; for firing ballistic missiles over Taiwan into Japan’s exclusive economic zone; for practicing strikes and blockades around Taiwan; for modernizing its military with little transparency or assurance; and more broadly for threatening the rules, standards, and norms that had brought relative peace and prosperity to the region for as long as people could remember. On the upside China was teaching middle powers like Australia a lesson about harnessing all elements of national power to defuse China’s challenges, avert war, and help shape a region that reflected Australia’s national interests; that is, a region “that operates by rules, standards and norms—where a larger country does not determine the fate of a smaller country; where each country can pursue its own aspirations, its own prosperity.”

While the focus on statecraft was new, Wong’s press club address built on the foreign policy position Labor had set out in opposition, with an emphasis on supporting existing norms, standards and rules of the international system and reaching out more proactively to countries in Southeast Asia and to the island nations of the Pacific to help shape a regional response to growing strategic competition.³¹ This competition was not just a contest between two great powers, Wong said it was “in fact nothing less than a contest over the way our region and our world work.”³²

Turning to regional issues, Wong’s primary focus was on the island nations of the southwest Pacific. The previous Australian government had failed in the Pacific, she claimed, because it had cut back on development aid, failed to address climate change, and reduced Australia’s diplomatic presence on the ground. Speaking for the Albanese government, Wong promised to make amends on all three fronts and set an example by visiting over thirty countries in her first year as foreign minister, including all Pacific Island Forum members. She announced further funding for placing diplomats in the region, promised an expanded development assistance portfolio, and anticipated more concerted action on climate change. 

This was not the first attempt to reinvigorate Australia’s relations with Pacific Island nations. In September 2016 the Turnbull government launched a Pacific Step-up in response to the deteriorating strategic situation in the Southwest Pacific, committing several billion dollars under the initiative to upgrade development assistance programs, expand infrastructure investment, finance high-speed submarine telecommunications, and support disaster and climate resilience in the Pacific.³³ But his government’s optics failed to match its actions as the coalition parties declined to reconcile their aims and understanding of strategic risks, centering on China’s expanding Pacific footprint, with the concerns of island leaders who regarded climate change their greatest strategic threat.³⁴ Senior figures in the coalition government were climate change deniers. The mismatch grew more acute under the Morrison administration. As federal treasurer, Scott Morrison once hauled a lump of coal into federal parliament declaring “don’t be afraid, don’t be scared, it won’t hurt you” to taunt those concerned about the strategic implications of climate change. That taunt was not easily erased in the Pacific Islands.

China managed climate politics in the Pacific more astutely than Australia despite being the greatest global offender in emitting one-third of the world’s greenhouse gas emissions. One factor was high level engagement. In 2014 President Xi Jinping visited Fiji, where he met with several Pacific Island leaders. In 2018 he made a state visit to Papua New Guinea. The following year China hosted the first of three “cooperation training sessions” on tackling climate change for Pacific Island leaders and in April 2022 established the China-Pacific Island Countries Climate Change Cooperation Center in Shandong.³⁵ Each year the country’s diplomats expend considerable effort persuading Pacific Island leaders that China shares their concerns about climate change and will help them manage climate risks.³⁶

The shortcomings of Australia’s Pacific Step-up were exposed in April 2022 when the government of the Solomons Islands announced it was entering into a security agreement with China that President Manasseh Sogavare maintained would address the island’s concerns about climate change and meet its development and security needs. Speaking to the agreement, President Xi said China understood the severe challenges of climate change that Pacific Island countries were facing and would cooperate in practical ways to offset them.³⁷

The cost of Australia’s failure was brought home by clauses in the Solomons agreement allowing Chinese vessels to stop over in Solomons ports and permitting Chinese forces to enter the country to “protect the safety of Chinese personnel and major projects.” The agreement further enabled Sogavare to call on China for armed police and military personnel to maintain “social order” in face of challenges from rival leaders in the island grouping.³⁸ The prospect of China playing a decisive role in the domestic politics of Pacific Island countries and securing space for stationing military equipment and personnel less than two thousand kilometers from Australia’s shores caused acute concern in Canberra and Washington.³⁹

Addressing the press club, Wong also spoke of the need for finer statecraft in Australia’s relations with Southeast Asian nations. That need was brought home in September 2023 when the new government in Canberra was “blindsided” by East Timor’s announcement that it was entering into a comprehensive strategic partnership with China that included a commitment to “high-level military engagement.”⁴⁰ Penny Wong had visited Timor Leste twice during her first year as foreign minister and spent considerable effort seeking to making amends for earlier government failings, to little avail.

On a visit in July 2023, she acknowledged earlier Australian wrongs in relation to Timor Leste. Australian media had earlier reported that in 2006 the Australian government of the day bugged the Timor Leste government’s cabinet room in Dili to secure an advantage in negotiations leading to an oil-revenue and maritime boundary agreement. Dili took that agreement to international arbitration in The Hague, arguing that the bugging invalidated the treaty. Canberra then challenged the competence of the conciliation commission in one of several cynical maneuvers that now required acknowledgement of wrongdoing.⁴¹ “Timor-Leste was right to initiate compulsory conciliation, as you were entitled to do under the United Nations Convention on the Law of the Sea,” Wong said.⁴² “The Australian government should not have formally challenged the competence of the conciliation commission.”  The similarity between earlier Australian and Chinese conduct was palpable, but in this case the revised agreement arrived at through negotiations was “consistent with international law,” she said, and so sent “a powerful signal of respect for the rules-based order at a time when those rules are being challenged.”

Who Gave Ground?

China wanted Australia to compromise on key national interests before it would resume high-level dialogue and cooperation, in the judgement of Frances Adamson, former ambassador to China and at the time of speaking in April 2021 Secretary of the Department of Foreign Affairs and Trade.⁴³ Adamson maintained that the Australian government sought a constructive relationship with China “where we can discuss differences” but China  “expects compromise on key national interests” before dialogue can begin. Beijing has since resumed dialogue and entered discussions on lifting tariffs and trade bans. Has the Australian government compromised on key national interests along the way to “stabilizing” relations with China?

Some expert commentators urged Canberra to do just that. Melissa Conley Tyler argued there were several points of grievance where Canberra could give way to Beijing.⁴⁴ One was to sign on to China’s Belt and Road Initiative, another, to abandon federal legislation enabling Canberra to override state and local government dealings with China, and a third to loosen foreign investment rules to facilitate greater investment from China. All three were matters raised in one form or another among Beijing’s fourteen grievances and all offered grounds on which Australia could yield to Beijing.

China business entrepreneur and one-time ambassador to China, Geoff Raby, suggested Australia could reset ties with China by supporting Beijing’s application to join the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), in effect wedging anti-American sentiment in China for Australia’s benefit.⁴⁵ China’s application for membership was, he argued in the Australian Financial Review, “both a direct challenge to Washington’s Asia-Pacific credentials and a possible avenue for Australia and China to mend their fences,” lending Australia a degree of leverage with China that it would not otherwise enjoy.

James Curran called for an escape from the ‘China threat’ narrative and a return to what he termed the Labor tradition of “diplomacy as destiny.”⁴⁶ He urged more conceptual thinking, a milder diplomacy, and less talk of threats to secure Australia’s relations with China and its future in the region. 

Others went further to argue that Australia should not just abandon its China threat assessment but show greater sympathy toward China in its strategic competition with the US.  Former Labor Prime Minister Paul Keating upbraided the Albanese government in a series of relentless attacks on its approach to China, its commitment to AUKUS, its support for NATO (he called NATO General Secretary Jens Stoltenberg a “supreme fool”⁴⁷) and its embrace of the US alliance. Addressing the National Press Club in March 2023, Keating said China was a threat neither to the US nor to Australia.⁴⁸ He condemned the Albanese Government’s foreign and defense policies for not taking due account of China’s concerns and singled out the responsible ministers for personal attack—the defense minister was “completely captured by America”— and he blasted the AUKUS agreement as the “worst deal in all history” for surrendering  Australian sovereignty to American imperialism.

These criticisms and suggestions did not go unanswered. Defending the reputation of his ministers, Albanese responded that Keating’s remarks diminished his standing as a respected former leader.⁴⁹ The most coherent counter-arguments were mounted by John Lee, former senior advisor to the coalition government’s foreign minister. Writing in the The National Interest, Lee argued that although Australia was hardly alone in facing economic coercion from Beijing, its recent experience was in some respects unique.⁵⁰ By attaching explicit political demands to its trade penalties China had for the first time explicitly linked commercial relations to its political objectives, revealing that economic coercion lay at the heart of its statecraft. Further, these coercive political demands were not confined to foreign policy but extended to domestic policies and legislation in targeted countries. As others have noted, several of the fourteen grievances related to domestic affairs in Australia of concern to Beijing, indicating China was punishing Australia for “refusing to give the former a right to directly shape or else veto governmental policy that affects Chinese interests.”⁵¹

As to suggestions that Australia should accede to some of China’s grievances, Lee argued in The Australian that offering concessions over “illegitimate and probably illegal” trade bans amounted to “rewarding one side for merely ceasing to do what is wrong.”⁵² In practice, the only consideration likely to prompt China to reverse its restrictive trade measures was if they failed to yield the results Beijing intended or were proving counter-productive, as appeared to be the case. Either way there was no point making concessions. And while improving relations with China through good diplomacy was important, Lee pointed out, good diplomacy was not aways aligned with good strategy.⁵³ Australia’s diplomatic brawl with China was the price Beijing demanded for Australia’s diplomatic achievements elsewhere.

What seems to have riled Beijing most was the success of Australia’s international diplomacy—in the sense of projecting influence abroad rather than simply not ruffling feathers—with countries other than China. Starting around 2016, at a time when other nations were barely aware of the risks of open engagement with China, Australia drew attention to China’s influence and interference operations in foreign jurisdictions, to its coercive diplomacy, to security problems associated with its overseas infrastructure investments and its telecommunications firms installing new generation equipment into national grids, and to the comprehensive challenge China’s unilateral actions in disputed maritime territories were presenting to what Canberra termed the rules-based order. China’s state-run media branded Australia an “upstart” for its outsized role in bringing these issues to international attention.⁵⁴ If Albanese wanted to remain true to his strategic assessments, Lee concluded, then he too “must be prepared for diplomatic scars along the way.”

At first Beijing appeared confused when the Albanese government failed to make any of the concessions proposed by sympathetic Australian voices. How could Australia expect to stabilize relations without yielding ground? In June 2022, China Daily reported that the Albanese government was failing to reciprocate the goodwill Beijing had shown since the election.⁵⁵ “From deliberately playing up and smearing China’s normal security cooperation with the Solomon Islands,” it claimed, “to eagerly jumping on the US bandwagon drumming up support for its containment policy against China, the current Australian government has displayed no signs of changing the course set by its predecessor.”

A year later, however, when authorities in China began lifting bans and punitive tariffs on Australian coal, barley, and lobsters, the official China Daily published an editorial linking Beijing’s concessions to Canberra allegedly acceding to a request to oppose Taiwan’s accession to the CPTPP.⁵⁶ Specifically, it commended the Albanese government for making “its stance clear that it does not support the island of Taiwan joining the Comprehensive Progressive Agreement for Trans-Pacific Partnership. That represents a big change from its predecessor on the matter and also the extending of an olive branch that Beijing has not ignored.”  The claim that the Albanese government openly declared it would not support Taiwan’s application for membership of the CPTPP was an overstatement and yet not entirely unfounded. Taiwan is an especially sensitive touch point in Albanese’s new Australia-China accord, as discussed below.⁵⁷

One concession the Albanese government has made relates to its diplomacy, both in the sense of not ruffling feathers and of projecting influence. On the one hand it modified the tone of its communications with and about China to reduce risk of causing offense. On the other it appears to have disavowed the kind of activist diplomacy with third parties concerning China which so enraged Beijing under the previous government. 

China’s diplomatic language has softened as well. Curiously, even at its most abrasive, some of the diatribes directed against Australia carried incongruous messages about other countries needing to “meet China halfway”⁵⁸ if they wanted to resolve their differences.⁵⁹ Facing a faltering economy in 2022 and increasingly hostile relations with the US and its alliance partners, Beijing found reasons of its own to meet Australia halfway.

The appointment of a new ambassador to Canberra helped. Speaking in February 2022, recently appointed ambassador Xiao Qian said Beijing was willing to “go halfway” to reopen formal communications with Australia and urged Australia to do the same.⁶⁰ After the Albanese government was sworn in, Foreign Ministry Spokesperson Wang Wenbin expressed the hope that “the Australian side would meet the Chinese side halfway to promote the healthy and stable development of the comprehensive strategic partnership.”⁶¹ At their first meeting, State Councilor and Foreign Minister Wang Yi advised Penny Wong that “the two sides should meet each other halfway, uphold a more positive mindset, [and] send more positive signals.”⁶² And on the sidelines of the ASEAN summit, in November 2022, Premier Li Keqiang told Albanese that  “China is ready to meet Australia halfway and work with Australia to seize the opportunity of the 50th anniversary of diplomatic relations and steady growth of China-Australia relations.”⁶³

Talk of meeting halfway was not well received in Australia, where memories of coercive diplomacy remained fresh, and politically-motivated trade penalties continued to cause hardship in rural and regional communities. Also, China’s change of tone happened to coincide with domestic legislation in Australian states in 2022 outlawing coercive control in personal relationships, which was accompanied by a public education campaign around resisting coercion rather than yielding to it. The idea of meeting China halfway, Lowy analyst Natasha Kassam remarked, was regarded in Australia “as a version of acquiescence or compliance” rather than a helpful framework for moving relations forward.⁶⁴ This defiant attitude was clearest on the trade front. “We’re not negotiating as such,” Trade Minister Don Farrell told journalists in a background briefing at the Bali G20 meeting in November 2022.⁶⁵ Referring to China he said “they’re the ones that imposed these trade blockages. Things aren’t going to get … back to normal until they lift those bans.” Albanese opted for different words, telling a press gathering at the Bali meeting that he preferred “the language of moving forward together.”⁶⁶   

Much of this confusion was lost in translation as relations gradually improved. Reporting on the seventh China-Australia High-level Dialogue Meeting in Beijing, in September 2023, China Daily stated that “China-Australia relations have shown consistent improvement since last year, with diplomatic, defense and people-to-people exchanges between the two sides gradually resuming.”⁶⁷

The language and style of diplomacy aside, there appear to have been few Australian concessions on security, defense, trade, or people-to-people exchanges. Trade was most vulnerable to compromise, particularly after it emerged that China’s “halfway’’ talk was a transactional negotiating strategy. In September 2023, Xinhua reported that China’s Ministry of Commerce was “willing to meet the Australian side halfway” with a package deal that involved lifting its prohibitive wine tariffs in exchange for Australia reversing anti-dumping measures on unrelated imports from China.⁶⁸ In this case the Australian negotiators declined the offer.⁶⁹ On barely and wine, however, the Albanese government suspended its challenges to China’s restrictions on wine and barley imports in the World Trade Organization ahead of bilateral negotiations. Given China’s transactional approach to meeting halfway that was more a tactical error than a concession.⁷⁰

On defense and security, the new government maintained the country was not giving way. In the carefully chosen words of Defense Minister Richard Marles, Australia was “stabilizing the relationship with China without compromising our national interest and our sovereignty.”⁷¹ A retired senior foreign affairs officer concluded after reviewing the Albanese government’s record in office that Australia continued to prioritize national security over trade and other economic interests and had not budged on national security concerns.⁷² Fergus Hanson described the Albanese government’s approach as one of “measured tone with strong policy,” a fair description of the balance the government was seeking between modified diplomacy and policy continuity.⁷³

Policy continuity included acts of omission. The Albanese government signaled good will toward China by maintaining the previous government’s position of not taking decisions that could possibly give offence. Benjamin Herscovitch pointed to several decisions of this kind involving continued inaction, declining for example to close down Confucius Institutes or to impose Magnitsky-style sanctions.⁷⁴ It also reaffirmed the previous government’s decision neither to vary nor cancel the 99-year lease on the Port of Darwin held by Chinese company Landbridge. And the government tried to balance its decisions, in the case of minerals investments for example by offsetting bans on critical minerals with approvals for other Chinese mining investments.   

The biggest decisions not taken by the Albanese government relate to Taiwan. Officials in Taiwan have long hoped that Australia’s growing recognition of the threat China poses to peace and stability in the region and the punishment the country endured on trade and diplomacy would open wider policy space for Australian government initiatives in partnership with Taiwan. Australia’s deteriorating relations with Beijing have, if anything, had the opposite effect, placing relations with Taiwan on hold for fear that any initiative would incite China to inflict further harm on Australian interests.

Specifically, Taiwan has been urging Australia to resume talks on entering into a Free Trade Agreement (FTA) and to offer support for Taiwan’s application for membership in the CPTPP. Taiwan’s hopes have been consistently disappointed irrespective of the party in government in Canberra.

Writing in December 2022 Kevin Magee, formerly director of the DFAT-staffed Australian Office in Taipei, offered insider insights into the previous government’s thinking on Taiwan. Magee revealed that at a time of acute tension in Australia-China relations three to four years earlier, DFAT officials raised the possibility of a Taiwan FTA and support for Taiwan’s membership in CPTPP to ministers in the former coalition government.⁷⁵ Both were entirely consistent with Australia’s One China Policy, but the ministers set the idea aside out of concern “that any movement on a Taiwan FTA or CPTPP membership would worsen the tensions with China.” A year or two later, as China applied further coercive pressure with selective trade bans and a freeze on ministerial-level communications, Morrison government ministers again warmed to Taiwan joining the CPTPP and entering into an FTA, but yet again declined to act. “As a result,” Magee writes, “the idea went nowhere.” The Albanese Labor government has shown strong policy continuity in disappointing the government of Taiwan by declining to take initiative on the proposed FTA and CPTPP membership.

Conclusion

The Albanese Labor government came to office in May 2022 determined to stabilize relations with China, while sharing the outgoing government’s grim strategic outlook and upholding its policy commitments around rebuilding Australia’s defense capabilities and forging closer ties with countries other than China. It moved rapidly to carry through on those policies. Penny Wong and Richard Marles were more proactive than their predecessors in building closer ties with Pacific Island countries and close neighbors in Southeast Asia. Anthony Albanese appears to have stabilized relations with China.

China has been no less active over the same period. Its success in securing defense agreements and potential military sites in the Solomons and Timor Leste draws attention to the scale of its ambitions as well as to the opportunities for Chinese statecraft created by Australian neglect and poor policy choices in decades past. The Albanese government corrected course on climate policy in the Pacific and acknowledged Australia’s errors in manipulating negotiations and mounting challenges to Timor Leste’s legitimate claims over maritime boundaries and resource revenue sharing. It is not clear that the damage can be undone, at least in the short term.

Apart from modification in the tone of its diplomacy, and reduced advocacy around the specific challenges China presents to the postwar rules-based order, little separates the Albanese government’s approach to China from that of its predecessor. Australia’s change in tone and its reduced diplomatic advocacy carry outsize weight in Beijing because they signal its success in putting the pesky “upstart” back in its box. Still, Australia’s strategic assessments are hardening and defense planning and co-operation with other countries in the region are pressing ahead. The difficult judgements and tough decisions were taken by the previous government. If all it takes for the Albanese government to stabilize relations is a change of tone and reduced diplomatic activism on Australia’s part, without compromising the tough judgements and decisions taken by the earlier government on foreign affairs, defense, and security, that would appear to many in Canberra a reasonable cost of doing business.

The most sensitive issue remains relations with Taiwan. Canberra continues to regard Taiwan through the lens of relations with China, and as a matter of good faith complies with the terms of the agreement with China on mutual recognition that Gough Whitlam negotiated over fifty years ago. Albanese’s visit on the anniversary of Whitlam’s visit confirms that commitment.
Compliance beyond those terms is coerced compliance. There is ample scope within the 1972 agreement for new initiatives on trade including an FTA and support for CPTPP membership, and yet any suggestion that Canberra should move forward on either matter with Taiwan now meets with a response similar to that of the previous government: it would complicate relations with China. In my judgement, declining to move forward in areas of economic cooperation permitted under the 1972 agreement for fear of triggering further coercive measures from Beijing is unlikely to deter coercion on other matters vital to Australia’s interests.

This is important because the accord on which bilateral relations are stabilizing sits on fragile foundations. The structural problems separating the two countries remain. China continues to deploy its comprehensive national power to build defense ties with smaller nations in Southeast Asia and the Pacific Islands and to exploit weak spots in the US alliance system with the aim of undermining the postwar rules-based order. Australia is working to uphold that order and if necessary to thwart China’s ambitions. Stabilizing relations with China can help to limit short-term damage to Australia’s national interests arising from those ambitions and may prove a useful pit-stop in the race to prevent China from realizing them.