Sino-Australian Relations

By Ichiro Suzuki


Australia has been going through difficult times with China in recent years. The bilateral relationship saw its peak in 2007 when the People’s Republic replaced Japan as Australia’s largest trading partner. In that year, Mandarin-speaking Kevin Rudd became Australia’s prime minister bringing the Labour Party back to power after an 11-year reign by the Liberal (conservative) Party’s John Howard. China’s economy was booming at that time and Australia was a major supplier to China of natural resources and agricultural goods. Then, at a time it looked the Sino-Australian relationship was entering a golden age, it has proved it cannot get any better if not descending outright.


In 2008, in a speech at Peking University, PM Rudd said that Australia could be China’s ‘Zhengyou’ or a critical friend who offers uncomfortable opinions. It was taken as Mr. Rudd overstepping into the issue of Tibet, an extremely sensitive issue or a taboo in diplomacy with China. Mr. Rudd proved to be too complacent about himself and where Australia stood vis-a-vis the People’s Republic. The bilateral relationship was not as rosy as what Mr. Rudd thought it was. 


Then in 2009, there was an arrest of Stern Hu, Chinese Australian who was the Shanghai office head of Rio Tinto, the Australian mining giant. His three other Chinese colleagues were also arrested. He was accused of bribery and espionage, and was sentenced to ten-years, and was released only in 2018. Mr. Hu admitted is guilt and Rio Tinto terminated his employment. On the other hand, their arrests came shortly after Rio Tinto declined to sell a part of the company to state-owned Aluminum Corporation of China (Chinalco) which already owned 9.3% of the company. Proposed doubling of Rio Tinto stake met with a fierce opposition in Australia driving the Rio Tinto management to raise capital in a different scheme. The Sino-Australian relationship still overcame the Rio Tinto incident, ending up with a free trade agreement between them in 2015. Australia was an inaugural member of the Asian Infrastructure Investment Bank (AIIB) upon its inception in late 2015.


In 2015, two years after the Liberals reclaimed the government, It was revealed that Labour Senator Sam Dastyari from New South Wales had accepted money from Chinese-Australian group Yuhu, and that it has affected the Senator’s decision on foreign policy. This incident was a rude awakening to the Australians on foreign influences, pushing them to assess the appropriate cost of maintaining the relationship with their largest trading partner. As China became more assertive in foreign policy and more authoritarian Internally under President Xi Jinping, Australians’ vigilance grew on influences from China. 


To begin with on foreign policy, Australia is a firm U.S. ally, under the Australia, New Zealand and the United States (ANZUS) Security Treaty of 1951. The country is also a member of Five Eyes, the intelligence network among English-speaking countries that consists of Australia, New Zealand, the U.K., Canada and the United States. While PM Rudd proudly presented Australia as a Pacific nation, Washington was obviously not pleased to see Canberra drifting too far into the Pacific. Since the Liberals returned to power in 2013, Australia has been clear a about its strategic tie with the United States. Canberra had no hesitation in denying Huawei in 5G networks building in 2018, in sharp contrast to indecisiveness in Ottawa and London.


Since the incident of Senator Dastyari, Australia has been ultra sensitive on potential infiltration of China through its citizens and permanent residents with Chinese background and students from China. Some Chinese students might raise their voice in tune with Beijing on Australian campuses. A new set of laws were passed in 2018 in order to prevent foreign intervention. Confucius Institutes were shut down at 13 universities. Investments by Chinese capital have been scrutinized and not all of their money is welcome. Billionaire Yuhu chairman Huang Xiangmo was revoked of his Australian permanent residency. In recent months, bilateral relationship has become a little more tense than before. Australia requests an independent study on the origin of the coronavirus crisis. China responded to it by suspending beef imports from four major meat plants in Queensland and New South Wales. Barley imports from Australia are subject to 80% tariffs. These are not the right times to suffer such blows as the Australian economy has entered the first recession since the early 1990s, and a very deep one at that. In addition, Beijing openly tells young Chinese not to go to Australia to study for racial Incidents concerns. (Australia does have a fair share of racial issues though they don’t appear on international headlines.) In 2019, 160,000 Chinese were enrolled in higher education in Australia, a substantially larger number than the U.S. or the U.K. in relation to the size of the country’s population. These students of course make significant contributions to the economy. Nevertheless, Australia shows no sign of of backing down, letting national security take precedence over commercial interests. The country is determined to stand up in contrast to the E.U. where business issues are often given higher weights than everything else in its relationship with China though the bloc tends to project itself as the guardian of human rights.


About the author: Mr. Suzuki is a retired banking executive based in Tokyo, Japan.

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