Australia performs diplomatic tightrope act between China and US

Sydney Harbour had an eager new American visitor last month. Passing under the Harbour Bridge and Opera House, the USS Canberra docked. It became the first US warship to be commissioned in a foreign port. The ship’s arrival was symbolic and highlights Australia’s continued and renewed focus on defensive co-operation with the United States.

Late last month the US and Australia reached an agreement that will broaden their military co-operation even further. The agreement will mean an increased American military presence across Australia in their naval and air bases. It is two years since leaders of Australia, the UK and the US announced the creation of their security partnership, Aukus. The first major initiative under this agreement was a commitment to support Australia in acquiring nuclear-powered submarines for defensive purposes.

Given the recent focus on military partnership with the US as it redefines its defensive strategy, it may seem surprising that Australia is also making positive diplomatic strides with China

These defensive manoeuvres come as the Solomon Islands prime minister Manasseh Sogavare recently entered into a policing pact with Bejing, after accusing Australia of withdrawing promised funding, which Canberra denied. Sogavere also ominously stated that “it takes only nine hours’ flight from China to land forces here”.

Given the recent focus on military partnership with the US as it redefines its defensive strategy, it may seem surprising that Australia is also making positive diplomatic strides with China. Prime minister Anthony Albanese inherited a completely broken relationship with China from the previous Liberal Party government, one that looked irreparable.

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Speaking on Anzac Day last year, then defence minister and current opposition leader Peter Dutton captured his government’s feelings about China. “The Chinese, through their actions, through their words, are on a very deliberate course at the moment, and we have to stand up with countries to stare down any act of aggression.”

Official talks between Australia and China stopped after 2019, resuming only when Albanese took office. As a result of the diplomatic tension between the two countries, Australian exporters suffered significant losses, particularly in the wine industry, that continue to be felt today.

China placed significant tariffs on Australian wine in March 2021 after Australia called for an investigation into the source of Covid-19. Similarly strict tariffs were placed on other Australian products such as barley and lobsters.

Albanese’s foreign minister, Penny Wong, is a crucial player in Australia’s diplomatic tightrope act. The pair understand that they need to work closely with defensive allies to ensure future security, while also working tirelessly to rebuild trust and a working relationship with China, Australia’s largest trading partner.

The pragmatic Wong has slowly thawed the jagged and freezing diplomatic relationship between the two countries.

China’s large economic engine still needs to be powered by Australian commodities such as coal and iron ore regardless of any perceived tension. The Australian government is also aware of a recently slowing Chinese economy and the role that it can play strategically as a significant trading partner.

The previous government chose diplomatic aggression against China and was met with a strong cold shoulder that shattered sections of Australian industry

Albanese and Wong are working well as a double act. Wong, a skilled lawyer from Adelaide, is able to stay rooted in the pragmatism of easing trade while also seeking more transparency from China on their security plans on the Solomon Islands. The previous government chose diplomatic aggression against China and was met with a strong cold shoulder that shattered sections of Australian industry.

Albanese met with President Xi Jinping at the G20 summit in Indonesia last November. His words provided a marked change of direction from the previous government. “Australia seeks a stable relationship with China. We have big differences to manage, but we’re always going to be better off when we have dialogue and we are able to talk constructively and respectfully, but also honestly, about what those differences are.”

Albanese is correct about the big differences that need to be managed with China, while also ensuring that their biggest defensive ally — the US — is kept happy and engaged. The USS Canberra arrived with pomp, ceremony and plaudits from the Australian government. The stars and stripes flew proudly in the harbour city.

While Wong will to try to untangle the strict Chinese tariffs that still affect Australia, specifically the wine industry, large Australian wine company Penfolds has taken a different tack. While tariffs continue, it has decided to work directly in China, unveiling its first wine made with Chinese grapes but using Australian techniques. It is pragmatism straight from Albanese and Wong’s playbook. Where there is a will, there is often a way.