The Australia-China relationship, which turns fifty in 2022, has in recent years become a seemingly endless narrative of contradiction and acrimony. On 26 January 2022, an opportunity for a reset came with the arrival of a new Chinese ambassador to Canberra, Xiao Qian 肖千. Speaking on 24 February, Xiao said that Chinese government wanted to open communication channels with the Australian government. He said that the People’s Republic of China (PRC) was ready to work together with Australian diplomats to move the relationship back onto the right track and that China was willing ‘to go halfway’ in establishing better ties with Australia.

Ambassador Xiao’s conciliatory line was rebuffed by Prime Minister Scott Morrison, who refused to meet him. Yet the ambassador’s conciliatory statements do point to a potential way forward – and the upcoming election provides an opportunity for a rethink of Australia’s China Policy.

Background

Chinese official sources have confirmed that Xiao comes to Australia with a mandate from Beijing to improve bilateral relations. The change of tone is particularly significant – China has not until now made any compromises nor sought to meet Australia ‘halfway’ on any issue since the deterioration of relations began in 2018. That deterioration followed a series of policy decisions that sought to limit Australian exposure to the PRC’s influence and power, including the introduction of the Foreign Influence Act (which didn’t specify the PRC but was understood as an attempt to counter PRC influence in Australian politics) and the decision to exclude Huawei from the nation’s 5G roll-out.

Ambassador Xiao met Foreign Minister Marise Payne on 10 March 2022 and with Shadow Foreign Minister Penny Wong six days later to deliver a similar message. The ambassador has also spoken with key Australian business figures including those from the Australia China Business Council and the Business Council of Australia.

Xiao Qian is a lifetime diplomat. Prior to his arrival in Canberra, Xiao Qian held postings in Ethiopia (Attaché 1986-1990), India (Third Secretary 1993-1996), the United States (Counsellor 2000-2003), and the Philippines (Counsellor 2003-2006), before being appointed ambassador to Hungary (2012-2015) and then Indonesia (2017-2021). DFAT sources indicate that in both countries he had good access to key decision-makers. When he left Hungary, he received an award from the Hungarian government for his achievements in strengthening China-Hungary relations. During his posting in Washington DC, sources indicate that he was well regarded by the State Department as someone they could work with.

Born in 1964, Xiao was the son of a senior cadre. He joined the Chinese Ministry of Foreign Affairs (MFA) in 1986 after graduating from university and has spent his entire career in the MFA. He speaks fluent English and Bahasa Indonesia, and has a working knowledge of Hungarian, Amharic, and Tagalog, with some French and Russian. According to Australian diplomats and businesspeople who have met him, Xiao is urbane, polite, and easy to deal with. His social media profile is low key and follows the Chinese official line very closely. But he is not a ‘keyboard wolf warrior’.

During his time in Beijing, Xiao has almost exclusively worked on Asian relations, holding the position from 2016 to 2017 of Director-General of the Department of Asian Affairs and Deputy Representative on Korean Peninsula Affairs. (A Director-General in the Chinese System is the equivalent of a First Assistant Secretary in DFAT.) Official sources indicate he has not had significant dealings with the Pacific countries.

As the 2022 federal election draws closer, the Morrison government seeks to use the China relationship, about which its rhetoric had grown increasingly politicised, as a weapon against the opposition, although it appeared to have been blindsided by the Security Pact signed between the PRC and Solomon Islands in April. The government has also been vocal in declaring it was “in lockstep” with the United States on the subject of China.

Xiao Qian with ANU Vice-Chancellor Professor Brian Schmidt during Lunar New Year celebrations 2022. Image: Jamie Kidston, ANU

Xiao Qian, tasked with making a guarded attempt to improve Australia-China relations, will observe the election as an experienced diplomat who firmly advocates his country’s position on issues but does not engage in aggressive tactics. After the federal election, Xiao is expected to launch a campaign of public speaking and appearances to push for an improvement in bilateral relations in the lead up to the 50th anniversary of the establishment of diplomatic relations on 21 December 2022.

In their meetings with Australians, Ambassador Xiao and his fellow diplomats have suggested a potential framework or roadmap for dealing with problems between the two countries, using the current state of relations as a starting point. While the PRC has taken no steps yet to unfreeze the relationship, the proposed process involves mutual concessions that would lead to that outcome.

The Chinese side have expressed, through both formal and informal statements, the desire for Australia to indicate that it regards China as a partner rather than a rival or enemy. Sources have said that Chinese officials have acknowledged that neither side wants to be seen as yielding to the other in the standoff, and both sides need to make simultaneous reciprocal concessions, which is likely the underlying meaning of ‘meeting halfway’.

The Chinese side have further suggested that rapprochement be worked out through diplomacy, and jointly announced. They have suggested that sensitive issues, such as the South China Sea, Xinjiang, Hong Kong, Taiwan, Tibet, human rights, as well as anti-Chinese racism in Australia, would need to be discussed through formal, discreet mechanisms, rather than public comment. This would be a return to the model of the human rights dialogue which ran successfully for a more than a decade before Beijing terminated it as part of the diplomatic freeze. Australia would not be alone among countries in using this type of mechanism to manage sensitive issues with China.

Critics will describe the invitation to ‘meet halfway’ as disingenuous, demanding to know which half of our sovereign agency will be surrendered.  It could be categorised as giving way in the face of economic coercion and renewing dialogue on China’s terms, not our own. This criticism is valid but a contrary argument could be made that our national interest could be best served by making compromises that match compromises made by the Chinese side. Diplomacy has always been about deals, compromises and meeting halfway, even in the most difficult situations.

Analysis

Our current policy settings have driven Australia into a dead-end. Many Australian exporters, business-people, educators, farmers, Chinese-Australians and others want and need workable relations, not unending confrontation with the PRC. There have been great opportunity costs and real losses in trade and investment to Australia resulting from the current policy. The treasury estimated that Australia has lost AU$5.4 billion in the first year of Chinese sanctions and the wine industry is expected to lose AU$2.4 billion over five years. The recently announced Australia-India Free Trade Agreement, while welcome, cannot deliver the potential benefits that our trading and investment relationship with China will continue to deliver.

Our goal should be to achieve at least the level of the relationships that China currently enjoys with our Quad partners, all of which are more expansive than our own – especially those with the United States and Japan. It is in part thanks to the rhetoric of the Morrison government that our relationship with China is in such a sorry state. Our Quad, and indeed AUKUS partners each maintain productive dialogues with China on political, economic, trade and human rights issues, while we remain frozen out.

The key to better managing our relationship with China is to adopt a mindset and policies that create a less hostile atmosphere while still doing what needs to be done to protect our key national security and economic interests. After the election, irrespective of the result, it may well be that a hard line on China will no longer serve a domestic purpose. The newly elected (or re-elected) government could advise allies in Washington and elsewhere that mending Australia-China relations serves our national interests without compromising theirs. Our goal would be to restore Australia’s relations with China, at least to the level that the United States and Japan currently enjoy with Beijing.

The appointment of Ambassador Xiao and the new Chinese willingness to compromise and talk has already changed the dynamic in the relationship. The federal election provides the opportunity for Australia to test this new approach by China, no matter which party wins. Rather than adhering to a policy that provides no way out of stalemate and amplifies our differences with our largest trading partner and rising power, we have the chance to adopt a better, smarter, diplomatic approach to the relationship.