China and Australia used to have close economic and political ties in the past, but the relationship has deteriorated significantly over the last decade. As a country rich of natural resources, Australia is an ideal trade partner for China, and mutual trade and investment were highly beneficial for both sides. The signing of the trilateral AUKUS security pact with the UK and the U.S., however, has made it clear that Australia is not going to bend to China’s increasingly assertive political and military posture in the region even if this comes at the costs of harming its own economic interests.
Development of China-Australia relations
During China’s economic rise, the relationship with Australia developed quickly. In 2009, China became Australia’s largest trade partner, and
China’s share in total Australian exports rose gradually to 39 percent in 2019. In the political realm, however, both countries maintained different point of views stemming from differences in their histories and political systems. With growing Chinese aspirations in international politics, these contradictions became even more visible. Major events contributing to the worsening of the China-Australia relationship were the banning of Huawei from participation in the Australian national broadband network out of security concerns in 2012 and from building the 5G network in 2018. Other developments included growing tensions about China’s expansion in the South China Sea, disputes about Chinese interference in Australian domestic politics, and most recently, Australia’s call for an investigation into the origins of the COVID-19 pandemic in 2020, all of which led to a hardening of political attitudes.
The China-Australia trade conflict
Australia’s insistence in a COVID-19 investigation outraged the Chinese government and led to what was dubbed a retaliation on economic fronts and setting an example by the Chinese side. Between May and November 2020, China banned the import of beef from four Australian suppliers, imposed an 80 percent tariff on barley and up to 212 percent tariff on wine from Australia, and effected a ban on Australian coal imports. Although these measures had an immediate economic effect, Australia was successful in finding alternative customers and divert trade flows. For instance,
Chinese imports of coal dropped considerably, but total Australian coal exports remained stable at around 44 billion U.S. dollars. Despite the restrictions,
total Chinese imports from Australia even increased further to 163.7 billion in 2021, mainly due to higher mineral prices. This illustrates that weaponizing the trade between the two countries is not easy because of the complementary structure of their mutual trade. Doing so inflicts damages on both sides resulting only in a loss of growth.
The public opinion
Surveys on public opinion prove that sentiments have declined on both sides. While more than half of the
respondents in Australia had a positive perception of China in the years until 2017, this decreased to only 21 percent in 2021. Chinese perceptions of Australia have hardened likewise. Although a majority in both countries
hope for an improvement in bilateral relations, only around one third on both sides believe that
this can be achieved in the next three years. This revealed a bleak attempt at any repair in relations, despite the attempts to restart economic cooperation and limit losses on both sides.
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