To kick it off, we asked three contributors (Nathan Attrill, Elena Collinson, and Kate Clayton) what they think the Australian Government should do this year to “manage” the bilateral relationship (note “manage” does not necessarily mean “improve”).

Nathan thinks it’s time to let go of the notion of ‘reset’, while Elena calls for a new strategy and framework. Kate focuses on potential collaborations on climate change and energy.

Nathan ATTRILL, Australian Strategic Policy Institute
The deterioration of the Australia-China bilateral relationship is not another tragic consequence of our annus horribilis. Rather, it is the decisive collapse of an aged China policy no longer fit for purpose as Beijing’s strategic outlook and capabilities have changed significantly over the last decade. The most constructive action Canberra can take is psychological.

Australia must give up on any notion of a ‘reset’. Problems in international relations can only be worked through, not put back in a box. Continuing to see China merely as ‘our largest trading partner’, a giant market of middle-class consumers for our wine and lobsters, does not recognise the complexity and impact of China’s current power on the future of global governance, discourse, globalisation, technology, or the environment.

Stubborn adherence to old paradigms in Australia-China relations clouds realistic assessments of what China is today and what Australia can do to manage this relationship. Canberra should be clearer about what it wants from China in the Indo-Pacific region beyond just ‘rules-based order’ platitudes. Australia needs to have a plan for when actors do not follow the rules. This may require insulating Australia from points of vulnerability, especially in the economic sphere.

There needs to be a greater acceptance that Beijing may not like us, but that does not preclude a workable relationship on issues of common interest. Cooperation, however, may require more ‘conveniently forgetting’ slights against national character or action that happened in the past, and not being baited by tweets from mid-level Chinese officials.

We are not ‘gum stuck to China’s shoe’ as described by one Chinese state media outlet, but Australia needs to understand the limits of its influence over Beijing. Acting unilaterally is foolish when the stakes are so high. Indeed, acting in concert with our allies and partners in the region, with similar interests, is essential. Australia needs a new ‘China policy’, one which is prepared to break from the past if need be, and one which sees China for what it is, not what we wished it were.

Elena COLLINSON, Australia-China Relations Institute, University of Technology Sydney
Given that Australian policymakers face the prospect of ongoing stasis in relations with China — a silver bullet is unlikely to be found any time soon — more thought might be given to how better to integrate the various dimensions of Canberra’s China and regional policies. The Opposition Labor Party has called on the government to ‘explain what their strategy is going forward’, yet have also demurred from offering up any substantive proposals for consideration.

For good reason, Australian and other policymakers in the region have had cause for concern about China’s assertive foreign policy turn and its over-confidence in prosecuting its agenda. Yet the fluidity of the current international environment does not allow for the promulgation of grand doctrines or narratives that alone can address Australia’s China challenge. All the same, an updated and realistic assessment of what Australia’s strategic priorities are and appraisal of the constraints it faces is needed in order to forge a new framework to guide Australia’s approach to China.

Both the Australian and Chinese governments continue to pay lip service to the descriptor of the bilateral relationship as a ‘Comprehensive Strategic Partnership’, established in 2014. But it is no longer fit for purpose, having been emptied of any substantial content in terms of ministerial contact, and having been agreed to during circumstances in the past markedly different from the present. As such it needs to be rethought and reconfigured. This could be the first step towards a new assessment of the relationship based on the difficulties of the last three years but also the opportunities that still beckon for both sides to continue to harness and build mutual economic benefit.

A new president in the US could offer a change in tone from Washington, which may mean a slight modification of the confrontational approach pursued by the Trump administration. This could allow Australia greater manoeuvrability and breathing room within which to formulate a revised approach towards China.

Kate CLAYTON, La Trobe University
In 2020 China banned Australian coal imports and committed to net-zero carbon emissions by 2060. This has highlighted Australia’s dependency on coal exports and climate change inaction. Australia is increasingly ill-equipped to tackle the twin strategic challenges of China and climate change.

China accounts for 21 per cent of Australia’s coal exports, worth $13.7 billion in 2019. In 2020, China imposed a series of trade restrictions on imports from Australia. This emphasises the urgency — if not the ease — of trade diversification for Australian export sectors that rely heavily on the China market. Alongside banning coal, China announced that it would reach net-zero emissions by 2060, calling for a ‘green recovery’ from COVID, compared to Australia’s gas-led recovery. Australia can no longer count on Chinese coal imports, as the bilateral relationship reaches a historical low and China shifts towards green energy.

Australia’s climate denial is damaging its relationships globally and leading to missed opportunities for economic partnership, including with China.

Coal ban or not, China’s move to becoming carbon neutral threatens Australia’s economic security and challenges the bilateral relationship more broadly. China’s shift away from Australian coal exposes Australia’s increasingly outdated energy sources and climate change inaction. To maintain a robust economic relationship with China and combat climate change, the Australian government needs to work with China on green energy. Despite bilateral tensions, in November 2020 the Australian Government’s Clean Energy Finance Corporation announced an investment of $9.8m in Shanghai-based company Sunman. Sunman produces the eArc, lightweight and flexible solar panel modules that can be mounted onto any surface. This demonstrates that green energy cooperation remains viable, and could be a source of stability and growth in the Australia-China relationship.

Moving into 2021, Australia should increase green energy collaboration with China. This can be achieved through dialogues, similar to the Ministerial Energy Dialogue, investment, as well as research and development. Working with Beijing on green energy provides an opportunity for Canberra to improve bilateral relations, increase economic security and combat climate change.

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From ‘revitalisation’ to ‘rejuvenation’

China’s northeast, formerly known as ‘Manchuria’, has always been synonymous with heavy industry and resource extraction. Comprising Heilongjiang, Jilin and Liaoning provinces, it is a region rich in strategic resources like iron ore, coal, oil, and surrounded by China’s northern neighbours: Russia, Japan, and North Korea. Since the 2000s, it has fallen behind other parts of the country perceived to be more embracing of Deng Xiaoping’s market reforms. 

‘Making Northeast China Great Again’ has been a major policy priority of China’s political leaders since a strategy to revitalise the region was introduced by then President Hu Jintao in 2003.

In its early years, the model for revitalisation of China’s ‘rust belt’ centred around encouraging industrial restructuring of the powerful state-owned enterprises and returning the region to its position as a manufacturing and industrial heartland of the Chinese economy.

In the wake of the escalating trade war with the United States, Xi Jinping made headlines following his inspection tour of the northeast in 2018, by giving his support for efforts to improve China’s food security through creating greater “self-reliance” in Chinese agriculture. Before Japanese annexation in 1931, Manchuria had been known for its soybean exports and massive cattle ranches as the region’s rich black soil and sheer geographic size had been underutilised compared to other regions of China over centuries.

Xi has incorporated revitalisation of the northeast into his wider ‘dream’ to rejuvenate the Chinese nation. It is no longer enough to restore the economy of the northeast to former Maoist glories – the northeast has always been a strategic asset, and as such it has always attracted the interest of rising powers. Xi Jinping is signalling a much wider transformation of the region, to help in “maintaining the strategic position of national defence security, food security, ecological security, energy security, and industrial security” of the Chinese nation.

‘Self-reliance’ is back in fashion for China’s rust belt, when previously it had been specifically identified as one of the underlying problems with the insulated business culture of northeasterners. Xi, unlike his predecessors, has sided with powerful local economic interests who have always been much more sceptical about the benefits of greater marketisation and exposure of the northeast to the global economy. A part of China that had for decades felt forgotten is now taking centre stage.

The new ‘breadbasket of Asia’?

Development of the region’s agricultural capacities for the domestic market is likely to increase, as secure supply chains for food are affected by the trade war with the United States and the reshaping of the global economy post-COVID-19.

As one example, the block on soybean imports from the United States in 2019 created an opportunity for soybean growers in the northeast to increase their market share. The Heilongjiang provincial department of agriculture and rural affairs has estimated that the soybean planting area in the province would increase by over 10 per cent in 2019.

For Australia, China has been the number one agricultural export market since 2010-11. In 2017-18, around 25 per cent, or $11.8 billion, of Australian total agricultural exports went to China, with wool, barley, and beef being the top three commodities worth a total of $5.7 billion. The northeast’s attempt to build a productive agricultural sector could be a serious challenge to Australia’s export position in that market, if successful.

Putting aside implicit or explicit threats by Chinese ambassadors on trade bans and consumer boycotts, transforming northeast agriculture has been in the works for many years. Indeed, the will of China’s political leadership to make the supply chain of food more secure and solve the problems of the northeast regional economy has grown only stronger in recent years.

China’s issues with food security remain largely the same as they did before Xi’s 2018 inspection tour. Arable land is scarce, the regulatory regime for food safety is still not trusted by Chinese consumers, and the Australia ‘brand’ is still strong. However, the sheer size of the Chinese economy means even regional changes, like those in the northeast, could have significant global consequences. And with Xi Jinping’s maxim of: “the Chinese people’s rice bowls must be firmly in their hands at all times”, China may be more determined than ever to rely on itself for its own food security.

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