Unpacking the Complexity of Sino-Australia Relations

12 Jul 2018
Unpacking the Complexity of Sino-Australia Relations
On 3 July 2018, the Perth USAsia Centre hosted Mr Graham Fletcher, First Assistant Secretary in the North Asia Division of the Department of Foreign Affairs and Trade, and Mr Christopher Lim, Australia’s Consul-General to Chengdu for a roundtable discussion at the University of Western Australia. The discussion, which included senior representatives of Government, academia and the private sector focused on the topic ‘Unpacking the Complexity of Sino-Australia Relations’. The roundtable explored Australia’s interests in the bilateral relationship with China, the growing importance of Southwest China, China-US relations and developments in the Indo-Pacific region.

The importance of the Australia-China relationship

Australia’s bilateral relationship with China is of great importance. Australia and China established diplomatic relations in 1972 and the relationship has blossomed quickly since then.   Underpinning this bilateral relationship is strong mutual interest in economic ties, regular high-level dialogues and ongoing cooperation in a number of areas. China is Australia’s largest two way trading partner, accounting for over 33.2% of Australia’s exports in 2017, and a growing source of investment. The long standing economic engagement between the two nations was further strengthened when the China-Australia Free Trade Agreement (ChAFTA) entered into force in 2015.

The dynamic nature of the Australia-China relationship is further demonstrated through other areas of engagement including defence and security, science and innovation, climate change, people to people links, including migration, tourism and education, and ongoing strategic dialogues including the annual leaders meeting and the Australia-China High-Level Security Dialogue.

Australia entered into a comprehensive strategic partnership with China in 2014; and reconfirmed its commitment to further advancing this partnership in the 2017 Foreign Policy White Paper.  The Australia-China relationship has experienced some challenges recently due to a number of issues on which Australia and China have differing views. However, as a rising and influential power within the Indo-Pacific region, it is in Australia’s strategic interests to ensure that China’s engagement with Australia and the world is a positive one.

Chengdu, the Gateway to Southwest China

2018 marks the fifth year since the establishment of the Consulate General of Australia in Chengdu. The capital of Southwest China’s Sichuan province, Chengdu is one the largest 10 cities in China, and is undergoing rapid economic development with GDP figures growing at a yearly 8 percent average. In recent years, a new driver of growth is its strategic location at the centre of China’s Belt and Road Initiative, where Chengdu is a key connection point between China to Eastern Europe through a rail link.

As a result of strong economic and educational links, Chengdu and Perth entered into a Sister City Agreement in September 2012. In identifying the rapid growth of Chengdu, there is now an established Australian commercial presence within Chengdu’s private sector and retail industry through a number of SMEs. ANZ opened an operations centre in the city in 2011, followed by a full branch in 2014, highlighting the strength of local Australian and Australia-linked businesses.
 
US-China relations and regional developments

A potential trade war between the US and China would have serious consequences for Australia and countries around the world. Interconnected economic clusters and global production networks in the Indo-Pacific region depend upon the rules-based global trading system. It is in Australia’s interests that any shifts or adjustments to the global and regional trade systems are made in accordance with international trade rules. Australian diplomacy - both in its trade and broader manifestations - will need to focus on developing new approaches which can achieve consensus while preserving a rules-based system.

Where to from here

Australia’s economic relationship with China extends far beyond trade in natural resources. Growing trade in services, including tourism and education, and food exports are just some elements which signify the broadening and deepening of the Australia-China economic relationship in recent years. In recognising the business, trade and investment opportunities within an increasingly prosperous Chengdu, Australia could benefit from increasing people to people links and economic engagement with the city.

It is in Australia and the region’s interest to positively engage with China and encourage China’s engagement in the rules-based system. As stated in the 2017 Foreign Policy White Paper “Australia will continue to place priority on positive and active engagement with China, including through annual meetings between leaders, foreign ministers and economic ministers.”

From left to right: Mr Graham Fletcher, First Assistant Secretary in the North Asia Division, Department of Foreign Affairs; Australia's Consul-General in Chengdu, Mr Christopher Lim; Ms Andrea Gleason, State Director of the Department of Foreign Affairs WA and Professor Stephen Smith, Director of the Perth USAsia Centre and former Australian Minister for Foreign Affairs and Defence.

Authors

Krystal Hartig
Krystal Hartig
Research and Program Assistant
Krystal Hartig is a Research and Program Assistant at the Perth USAsia Centre. She is responsible for assisting in the development of major research projects and  the delivery of the Centre's programs and events.
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