Renata Marques (*)

In 2020, China and Australia saw their bilateral relations deteriorate as a result of events that, in fact, started a few years earlier. Most recently, China has been putting in place its wolf worrier diplomacy and using trade disputes with Australia as a way of retaliation. The relationship deterioration is not new nor restricted to trade. Overall, the new developments look like a clear message from China on how it will deal with countries that interfere in their national interests.

Despite the apparent problems raised by the Chinese government related to anti-dumping of Australian products, such as barley, there are other concerns driving China’s trade dispute towards Australia. Both sides are responsible for the current state of affairs.

Some events account for this situation. First, in 2018 Canberra decided to ban the Chinese corporation Huawei from providing 5G Technology in Australia. The country fears that Beijing interference and use of Chinese companies to gather intelligence could pose a threat to Australia’s national security.

Not only did the Australian government blacklisted Huawei and ZTE, but also advocated in favour of a united position within the Five Eyes countries, including Canada, New Zealand, the United Kingdom and the United States. For Beijing, the decision to ban both companies was based on discrimination against Chinese companies and advised Canberra to abandon ideological prejudice.

A similar decision was taken in 2020, when Canberra was against a $600 million deal between a Chinese and Japanese dairy company based in Australia. The government argued the deal was contrary to the national interest, despite the approval from the Australian Competition and Consumer Commission, about the impact on the economy.

However, most of the current geopolitical tensions between both countries is the result of Australia’s decision to call for an inquiry into how China handled the Covid-19 outbreak. As a consequence, the trade dispute took new momentum with the Chinese government imposing 80.5 percent tariffs on Australian barley as an allegedly retaliatory measure. In recent past, China had already opened an anti-dumping investigation on Australia’s barley over food security concerns and imposed an anti-dumping tariff of 73.6 percent.

Since October 2020, the trade dispute is affecting other goods. China imposed tariff barriers on wine, beef, seafood, timber and sugar from Australia sparking further tensions between both countries. In December, China decided to impose a ban on Australian coal in an attempt to stabilise coal purchase price.

Tensions between them have also increased after Australia and Japan established a reciprocal access agreement that aims at increasing defence cooperation and joint exercises in both countries. Japan is a Chinese strategic rival in the region and it is also part of the Quadrilateral Security Dialogue, or Quad, comprised by India, United States and recently joined by Australia. In November, the four member of Quad took part on the annual naval exercise in the Bay of Bengal and in the Arabian Sea to increase defence cooperation among them.

Both initiatives have the intention of providing strong cooperation and maritime security in the region, particularly on the view of China’s increased expansion on the South China Sea (SCS) and dispute over the nine dash line. The SCS is vital not only to China, but also to Japan, South Korea and Taiwan, given it connects the Strait of Malacca to the Pacific and the Indian Oceans, two relevant routes of maritime trade.

Additionally, Canberra has also been working on supporting the Indo-Pacific region on economic and health initiatives considering the impact of Covid-19 pandemic. These represent a great threat for China’s trade and security projects in the region.

In another initiative, Beijing handed to an Australian local media a list of 14 complaints about the bilateral relationship paving a new low-point on the relationship. Then in December, Australia filed a World Trade Organisation dispute against China over tariffs imposed on barley.

Finally, to respond to the threats imposed by the Chinese rise, Canberra introduced the foreign investment reform bill, approved in late 2020. The reform bill intends to protect the country from foreign investments which may affect the Australian national security. Not only Canberra changed its usual approach of welcoming foreign investments, but it has also imposed a critical assessment on foreign investments in the telecommunication, energy and defence sectors, especially from China.

Most of these developments took place during a turbulent year with consistent economic, social and health disruptions around the world. It is still unclear whether China will adopt the same stance towards other countries which criticise or interfere in Beijing’s policies and internal affairs. While some Australian government officials contest China’s rise and assertiveness, some analysts understand it is just restoring its position in the world order.


(*) Renata Marques is currently studying master of international relations in Melbourne, Australia.

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