The deterioration of the Australia-China relationship

By Sofia Arts Romero and Manon Goirand

The relationship between Australia and China can best be described as a strong bilateral economic and trade relationship. Since the 1970s both governments have committed to building this cooperation through high-level visits and meetings. In 2015, the implementation of China-Australia Free Trade Agreement (ChAFTA) created great benefits for both parties, including lower tariffs, greatly benefiting Australia due to its substantial boost in economic growth and creation of job opportunities (Department of Foreign Affairs and Trade, 2020). However, due to this agreement, Australia has become highly dependent on China, as it relies heavily on their exports, investments, and tourism. As seen on the graph below, China is Australia’s biggest exporting market and as well as their second biggest when it comes to imports, making China its biggest trading partner. It is also Australia's fifth largest direct investor, and the tourism sector counted over 1.4 billion Chinese visitors in 2018 and the number of incoming chinese students continues to grow (Department of Foreign Affairs and Trade, 2020). But is this dependency dangerous for Australia if the relationship becomes strained? 

Tensions between the two countries began early this year when Scott Morrison, Australia’s Prime Minister, made an independent inquiry into the origins of the coronavirus pandemic (Humphreys, 2020). From then on the relationship quickly deteriorated. China took offense and saw this action as an attack, they replied immediately by increasing tariffs and completely suspending imports of some Australian goods. They also advised Chinese students and other citizens not to visit the country because of racists attacks following the COVID-19, it remains unclear if these accusations are founded or if it is a way to boycott Australia. Thus, the Chinese government responded to a political act with a trade “war”, even though Australia does not consider it a trade war and has decided to not retaliate with higher tariffs. This has been hurtful not only for big Australian companies that depend on Chinese imports or exports, but also on other sectors like education and tourism. The Australian government has tried negotiating a solution but was met with no response from the Chinese government. Both countries will suffer economic consequences from this conflict, especially Australia.

Moreover, the conflict continued to amplify in June after all Chinese threats to Australia continued, to which Morrison responded by stating that Australia would be willing to choose national autonomy over economic interests, even though it implies a huge burden for Australia given China’s importance in their economy. Additionally, given the recent protests and conflicts in Hong Kong, China lashed out at the Five Eyes - an intelligence alliance including Canada, The U.S., New Zealand, Australia, and the U.K. - as Britain and Australia show support by potentially providing safe havens to Hongkongers who seek to leave the city (Javad, 2020).

As far as it is concerned, it is said by many that these tensions with China may potentially lead to a new ‘Cold War’, as already the India-China skirmishes that started early May have evolved. With the tensions between Australia and China, will Australia potentially join India in their ongoing war? It is very much unclear, especially since the Australia-China relationship deterioration have been of recent events, as well as the China-India war. There is still much more to evolve between these countries in order to determine what will happen next.

Overall, the deterioration of the relationship between Australia and China has already caused a great economic impact on Australia, and will most certainly continue to evolve over the next upcoming weeks and months. But for now, everything seems like a blur in regard to what will come next.

References:

Humphreys, J. 2020. What’s behind the Australia-China conflict? Redflag. [online] Available at: https://redflag.org.au/node/7194 [Accessed July 14, 2020].

EurAsian Times Desk. 2020. China-Australia Conflict Escalates As Beijing Slams Australia Over Espionage & Instigating Its Nationals.The EurAsian Times. [online] Available at: https://eurasiantimes.com/china-slams-australia-over-espionage-instigating-defection-of-chinese-nationals/ [Accessed July 14, 2020].

Department of Foreign Affairs and Trade. 2020. China country brief. Australian Government Department of Foreign Affairs and Trade. [online] Available at: https://www.dfat.gov.au/geo/china/Pages/china-country-brief [Accessed July 14, 2020].

Javad, R. 2020. China lashes out at Five Eyes as Britain, Australia offer to help Hongkongers. (2020, July 04). South China Morning Post. https://www.scmp.com/news/china/diplomacy/article/3091605/china-lashes-out-five-eyes-nations-britain-and-australia-offer [Accessed July 19, 2020]