Only a few short years ago, Australia’s ties to China were at their lowest point in modern history.
China has attacked Australia with trade embargoes, cyber attacks, and demands that we abolish our democratic institutions. The “wolf warriors” at the embassy threatened the local media.
Things have returned to normal now. What a triumph for the Albanese government’s subtle diplomacy!
Wait, is it?
What have we gained, and what have we sacrificed by refocusing on China? And what are the foreseeable means of lending it policy relevance?
As a result of the Australian government’s efforts to ease tensions, China has lifted most of its trade prohibitions on Australian exports.
Our trade with China is exploding again as the country has diverted more coal and barley.
The government is still considering wine, but it seems likely that restrictions will be relaxed at some point as well.
Was this a smart move on our part? Despite China’s embargo, Australian exporters persevered and expanded their reach to other countries. And the diversification cut China’s economic clout against Australia by a lot.
Why rush back? A recent assessment by the Productivity Commission found that the country felt almost no effects from the trade war with China.
China hasn’t evolved, and the risk of more attacks on Australia is more real than ever. Its rhetoric against its neighbours and Taiwan has become even more aggressive.
Beijing only concluded that the trade war with Australia was counterproductive because it helped rally liberal democracies worldwide against itself.
And that’s exactly what Australia’s re-engagement with China has cost. It has weakened the liberal democratic coalition that came together to aid our defence.
That is not a price worth paying.
Indeed, other nations learned an important lesson from the attack on Australia. They are now doing voluntarily what we were forced to do: derisking trade.
The US is doing so at astonishing speed through industry and trade policies. Supply networks within North America are thriving. Since World War II, factory construction in the United States has never been this rapid.
This insurance is prudent in light of the dangers posed by Covid and China’s persistent intrusions into the territories of Asia’s more liberal neighbours.
If you’re an Aussie, you might wonder why this isn’t causing greater concern in Canberra.
Why is the Albanese government working so hard to re-engage trade with a hostile trading partner if our strategic sponsor is bracing for the prospect of ties being so nasty that commerce is blocked with the same?
The troubled state of the Chinese economy only makes problems worse. As the population ages, the country’s demographic bubbles in real estate and infrastructure investment are bursting.
The economy is flooded by deflation, yet interest rates cannot be lowered for fear of sparking capital flight and currency collapse. Its ability to stimulate the economy is being stifled.
China’s faltering economic model offers limited promise as an export market.
The rising young unemployment rate is a worrying result of these economic constraints. If that trend continues and discontent grows among Chinese citizens, the CCP may take drastic action.
China could try to annex Taiwan as a last resort economic stimulus, cutting off all commercial lines to Australia from China.
Because he cares for nothing else:
The Prime Minister Anthony Albanese says a letter from detained Australian Cheng Lei is “moving”, but her release from detention won’t be a condition on him visiting Beijing.
Don’t be thankful it’s not you. It is you and your country.
