SYDNEY — The lobster tanks are crawling with crustaceans. The shiraz is ready to ship. And the coal piled up in Australian ports is finally cleared for transit.
Three years after China launched crippling trade restrictions on Australia, the two countries have begun to patch things up. Their leaders met for the first time in half a decade in November. Top officials have resumed regular dialogues. And Australian Trade Minister Don Farrell is expected to soon travel to Beijing.
“In almost every aspect where we’ve had trade blockages or disputes, there appears to be progress being made,” Farrell, a winemaker, told state broadcaster ABC on Thursday. “My job is to convert those discussions into practical outcomes for Australian businesses.”
But even as business owners in both countries begin to dream of a return to the roaring trade of 10 years ago, the rapprochement faces an early road — or, rather, sea — block.
On Monday, President Biden is expected to meet with Australian Prime Minister Anthony Albanese and his British counterpart, Rishi Sunak, in San Diego to reveal details of a plan to supply Australia with nuclear-powered submarines under the trilateral AUKUS security pact.
The announcement follows a year and a half of top-secret discussions between the three nations.
Australia will buy up to five of America’s state-of-the-art Virginia class attack subs, which experts said cost about $3 billion each and are expected to be delivered as early as 2032. The ultimate model will be British-designed but will contain extensive U.S. technology and will take until the 2040s to produce.
China won’t be pleased.
“AUKUS is coming over the horizon, and whatever comes is going to be unwelcome in Beijing,” said Michael Fullilove, executive director of the Lowy Institute, a Sydney think tank. “That will impose some limitations on the extent of the Australia-China rapprochement.”
Biden has made no secret that he sees China as America’s top competitor. From computer chips to diplomacy in the Pacific, his administration has continued the hawkish stance of the Trump era and sought to push back on Beijing’s growing global influence.
What’s more, Biden has eschewed the United States’ long-standing policy of strategic ambiguity on Taiwan by stating that the United States would intervene if China were to invade the self-ruled island democracy.
But the situation is different Down Under, where Albanese is walking a foreign policy tightrope: pushing ahead with an AUKUS agreement that deepens his nation’s dependence on the American military for decades to come, while also trying to thaw the chilly Australia-China relationship he inherited last year. On one side sits Australia’s greatest ally; on the other, its biggest trading partner.
“This is Australia’s foreign policy task for the ages,” said Fullilove. “Trying to guarantee our security by increasing our capabilities by doubling down on our old alliances, and at the same time seeking to cooperate with China when we can.”
For two decades starting in the late 1990s, China’s rise was welcomed with few questions in Australia.
“Australians were kind of in this state of nirvana,” said James Curran, a history professor at the University of Sydney who recently wrote a book on relations between Beijing and Canberra.
“We could have the security alliance with Washington and we were paying our dues by assisting the United States in the Middle East and Iraq and Afghanistan. But we had this relationship with China that allowed Australia to survive the global financial crisis quite well, almost unscathed. And so there was this idea that we could ride two horses simultaneously.”
The ride got bumpier in 2017, however, amid accusations of Chinese spying and political meddling. Australia passed a foreign interference law and became the first nation to ban Chinese telecom giant Huawei.
In early 2020, conservative Prime Minister Scott Morrison prompted outrage from Beijing by calling for an investigation into the origin of the coronavirus pandemic. China hit Australian barley with stiff tariffs, and soon Australian coal, beef, wine and lobsters also faced severe restrictions. Later that year, Beijing issued a list of 14 “grievances” it wanted Australia to address before normal relations could resume.
When Morrison joined Biden and then-British Prime Minister Boris Johnson in announcing AUKUS in September 2021, it reflected growing bipartisan Australian concerns about the long-term future of Asia and China in particular, Fullilove said.
“In response, Australia wants to increase its capabilities and double down on its alliance with the U.S.,” he said. “Those are two very unwelcome signals for Beijing.”
Becoming just the seventh nation to acquire nuclear-powered submarines was a historic decision for a “middle power” like Australia, according to Rory Medcalf, head of the National Security College at the Australian National University.
It demonstrates that “Australia is living in a much more dangerous strategic environment than a decade ago,” he said, likening the development to Sweden and Finland joining NATO in response to the Russian invasion of Ukraine.
China accused the AUKUS countries of stoking a Pacific arms race and a new Cold War.
Albanese’s center-left Labor Party was elected in May on a promise to push ahead with AUKUS, while also avoiding Morrison’s incendiary anti-China language. Albanese and his foreign minister, Penny Wong, have largely succeeded.
“They stopped poking China in the eye with some of the rhetoric of the previous government,” said Curran. At the same time, however, the Albanese government has adopted the tough policies its conservative predecessors set on China, from AUKUS to trade disputes, he said.
The recent positive signs are the result of China, not Australia, changing course. Facing domestic struggles including a slowing economy and declining population, the nation of 1.4 billion has sought to improve relations with a number of countries in recent months — including the United States, until “balloongate” scuppered U.S. Secretary of State Antony Blinken’s planned visit to Beijing.
The shift has been most noticeable in Australia simply because relations were so dire, Fullilove said. After five years without top-level dialogue, there has been a flurry of talks between Australian officials and their Chinese counterparts, capped by a meeting between Albanese and Xi Jinping on the sidelines of the Group of 20 summit in Bali in November.
“China has been initiating all these gestures,” said Chen Hong, director of the Australian Studies Center at East China Normal University in Shanghai, whose Australian visa was canceled in 2020 after officials raised security concerns that Chen says were spurious.
“After Albanese took office, he and his team responded to this goodwill,” Chen said. “It takes two to tango.”
Above all, however, China’s subtle shift is designed to ensure access to Australian coal, steel, iron ore, lithium and other resources at a time of increasing American pressure to cut China out of global supply chains.
“Beijing doesn’t want to be fighting multiple geopolitical fights as its competition with Washington heats up,” said James Laurenceson, director of the Australia-China Relations Institute at the University of Technology Sydney. “And I think it’s more keenly aware than ever of Washington potentially assembling an energized coalition that might undercut China’s interests.”
There are early signs of trade restrictions easing. Some Australian coal ships have been allowed into Chinese ports, though it hasn’t been all smooth sailing. A Chinese diplomat visited an Australian lobster exporter, raising hopes that the sea creatures could soon be boiling in Beijing kitchens.
Jane Golley, an economist at Australian National University who focuses on China, said Chinese officials are “clever strategists.”
“Becoming more friendly to Australia now does make Australia’s position more awkward — awkward in AUKUS,” she said. But she added that Australia shared blame in the trade standoff, and hoped Albanese would be open to negotiation.
Whatever is announced on Monday, it shouldn’t come as a shock to China, Medcalf said. “The timeline was set out when AUKUS was announced 18 months ago,” he said. “It’s China’s choice as to whether this announcement is disruptive, or not, to the bilateral relationship.”
