Charm offensive: Australia's dance between China and the U.S. | Insiders On Background

Key Concepts:

• Australia-China relations: Balancing economic ties with security alliances.
• Asymmetrical relationship: Acknowledging China's greater power and influence.
• Megaphone diplomacy: Publicly criticizing or pressuring another country.
• Sovereign risk: The risk that a country will change its policies in a way that harms foreign investors.
• Foreign Investment Review Board (FIRB): Australian government body that reviews foreign investment proposals.
• Free Trade Agreement (FTA): Trade agreement between Australia and China with a continuation clause for ongoing liberalization.
• Green transition: Shift towards renewable energy and sustainable practices.
• Wolf warrior diplomacy: Aggressive and confrontational diplomatic tactics.
• ORCAS and QUAD: Security alliances indicating Australia's alignment with the US.

1. Stakes of Anthony Albanese's Trip to China

• The trip is "extremely important" due to international uncertainty and China's role as Australia's largest economic partner and a key player in regional stability and security.
• The Prime Minister's six-day, three-city visit (Shanghai, Chengdu, and Beijing) is his longest to a single country, highlighting the significance of the relationship.
• The absence of Australian media permanently based in China is noted as a disadvantage in understanding the country's complexity and the drivers of its leadership.

2. Stereotypes vs. Contemporary Reality of China

• Stereotypes portray China as a "one-party authoritarian" and "draconian" state.
• The reality is characterized by "enormous diversity, creativity, and great energy," which has fueled the country's economic transformation over the past 30 years.

3. Importance of Leader-to-Leader Relationships

• Personal relationships between leaders matter in diplomacy, fostering understanding and allowing for clear and private expression of national interests and ambitions.
• Drawing a parallel to Bob Hawke's discussions with Chinese leaders in the early 1980s, the trip presents an opportunity for Albanese and Xi Jinping to shape future policy.

4. Managing Asymmetrical Power Dynamics

• The relationship between Australia and China is "asymmetrical" due to China's greater size and power, similar to the Australia-US relationship.
• Historically, Australian diplomacy has been "adroit and adept" at managing these differences.

5. Dynamics of Formal and Informal Meetings

• Formal meetings are structured with pre-determined talking points and strict protocol.
• Informal occasions, such as dinners or private meetings, allow for a "fairly free exchange" and rapport-building.
• Albanese's "good instincts" in avoiding "megaphone diplomacy" and addressing sensitive issues privately are appreciated by the Chinese.

6. Contentious Issues and Expected Outcomes

• Expected issues to be raised by Australia: the case of Yang Hen Jung, military buildup in the South China Sea, and broader efforts in the Pacific.
• Expected issues to be raised by China: the port of Darwin and foreign investment within Australia.
• Each side expects these issues to be raised and potentially "politely rebuffed."
• Raising these issues at the highest levels is crucial for them to filter down through the Chinese system.

7. The Port of Darwin and Sovereign Risk

• The potential reversal of the port of Darwin contract is a "big issue for Australia in terms of sovereign risk."
• The operation of the Foreign Investment Review Board (FIRB) is seen as making Australia a "much less congenial place to invest in" for Chinese companies.
• The treasurer's signals suggest little appetite for changes to the FIRB structure.
• The FIRB is ultimately a political process, with the treasurer having the final say.
• An example of a "bizarre" decision was the blocking of a Chinese dairy company's acquisition of beager cheese on national security grounds.

8. The Case of Dr. Yang and Diplomatic Progress

• Dr. Yang's case is expected to be raised, but the potential for progress is uncertain.
• The successful management of Changlay's case, securing her return to Australia, is attributed to persistent pressure from the foreign minister.

9. Maintaining Diplomatic Success

• Maintaining success requires "more of the same" approach: avoiding megaphone diplomacy and maintaining cabinet discipline.
• The Albanese government's internal discipline contrasts with the Morrison government, where ministers were "freewheeling" in their criticism of China.

10. Future of the Relationship and Potential for Growth

• The Prime Minister should emphasize that China is Australia's largest export market and that Australian jobs and prosperity depend on building trade.
• The visit should focus on identifying areas where interests align and pursuing cooperation.
• China's interest in artificial intelligence (AI) and the digital economy should be explored, with sensitive areas potentially "ring fenced" for security reasons.
• Cooperation in the "green transition," including electric vehicles, renewable energy, and green steel production, presents a significant opportunity.

11. Lessons Learned from the Diplomatic Freeze

• Australia has become "ultra cautious" and may have missed opportunities.
• China recognizes that its "wolf warrior diplomacy" was "utterly counterproductive."
• The current situation presents an opportunity to "lift our sights" and realize greater opportunities, not be held back by past trade disputes.

12. Balancing China and the United States

• Every Australian government faces the challenge of balancing the security relationship with the US and economic opportunities with China.
• Australia has made clear its primary security interests are aligned with the US through commitments to ORCAS and elevating the QUAD dialogue.
• The timing of a meeting with Donald Trump is not a major factor in the nature of the trip to China.

13. Rhetoric Around Australian Independence

• The Prime Minister and Foreign Minister are reflecting growing concerns about the extent to which Australia may have compromised its independence through ORCAS, allowing the US to base bombers in Tindle, and opening Sterling Naval Base to nuclear-powered submarines.

14. Conclusion

The Prime Minister's trip to China is a crucial opportunity to strengthen economic ties, address contentious issues, and explore future cooperation, particularly in areas like AI and the green transition. While acknowledging the challenges of balancing relationships with China and the US, and recognizing the asymmetrical power dynamic, the expert suggests that Australia can navigate these complexities through skilled diplomacy and a focus on mutual interests. The key is to avoid megaphone diplomacy, maintain internal discipline, and lift sights beyond past disputes to realize the full potential of the relationship.