Anthony Albanese, the Australian Prime Minister, recently wrapped up a six-day trip to China. This journey included a private meeting and banquet with Chinese President, Xi Jinping. Engagements also included discussions with Premier Li Qiang and Chairman Zhao Leji of the National People’s Congress. Supporters of Albanese have praised the visit as a diplomatic triumph. However, the underlying motive for this trip was to strengthen Australia’s economic ties with China which it heavily relies on, especially in the face of shifting geopolitics and trade frictions caused by US President Trump.
Despite Australia depending heavily on trade with China, Albanese asserted that this did not conflict with Australia’s military-strategic alliance with the US. He argued that the two relationships could exist independently, emphasizing the role of a “balance.” Yet, the conditions surrounding the visit highlighted the unsustainability of such a perspective and unveiled tangible concerns in Australia’s capitalist system.
The continual rise in tensions caused by the US’s plan for conflict with China presents a clear message from the Trump administration: No more juggling act. On the eve of Albanese’s departure, the Trump administration demanded that Australia stand with Japan in pre-committing its military assets to a potential US war with China over Taiwan. Such strong pressure from the US attempts to disrupt Albanese’s mission and follows their previous demands for Australia to heighten its military spending from approximately 2% to 3.5% of its GDP.
To add more tension, Albanese’s trip coincided with the initiation of Talisman Sabre military exercises on Australian soil. With over 19 countries participating and the use of cutting-edge military technology, this year’s war games represents the biggest joint US-Australian venture yet. Such an event is seen as a rehearsal for a potential US-led aggressive war against China.
Although the visit was notably long, significant discussions or concrete agreements did not characterize it. Albanese expressed “concern” to President Xi about China’s live military training in the Tasman Sea. These exercises, legally conducted in international waters, were presented as alarming by commentators leaning towards the US. Additional issues raised by Albanese involved the situation of Yang Hengjun, a Chinese-Australian writer jailed on spying charges in China.
Yang’s controversial case has been utilized by Australian national-security advocates to point fingers at China for alleged ‘human rights’ and legal violations. Still, Albanese sidestepped several sensitive topics. He stated that US demands for Australia to actively participate in conflict with China didn’t surface in his talks with Xi. Furthermore, he chose not to discuss the subject when questioned by journalists. The Taiwan issue, a potential trigger for a future conflict given the US’s tacit support of Taiwanese separatism, was not broached either.
The Chinese leadership, on the contrary, appeared reserved about their anxieties regarding Australia’s proactive role in countering China. They held back on discussing the Australian government’s termination of a Port of Darwin lease held by a Chinese firm citing national security concerns. This profound decision could significantly affect future Chinese investments in Australia if companies could be deemed ‘state-connected’ due to Chinese government’s extensive oversight.
The main focus of the visit seemed to revolve around the trade ties. Alongside Albanese was a strong delegation from the business sector, including some of the leading figures in the iron ore industry. Albanese emphasized, “Iron ore represents by far our largest export by value, and overwhelmingly it comes here to China.” In the 2023-24 fiscal year, iron ore constituted 21% of Australia’s exports, with over four-fifths going to China, a also major buyer of other Australian exports including coal, minerals, and natural gas.
In the corresponding year, China accounted for 32% of Australia’s exports. This is more than twice the export share of Japan (12%), the second major buyer, and more than five times that of the United States (6%). Australia is the primary source of approximately 60% of China’s iron ore imports, which are crucial for steel production, having widespread industrial implications. However, China has recently displayed intentions to diversify its iron ore sources, a move that could affect Australia as a major supplier.
China is looking to minimize risks associated with iron ore imports – it is progressing towards a 12 million-tonne iron ore processing plant in Sierra Leone and planning similar ventures in multiple African countries like Guinea, Liberia, Cameroon, and Congo-Brazzaville. These are signs of an emerging concern over the potential implications of China reducing its reliance on Australia for iron ore supply.
The existing drop in commodity prices has already influenced the income of mining companies, indirectly affecting the national budget expected to have a deficit for the forthcoming decade. Despite high expectations, the trip did not result in significant agreements. Apart from a planned review of the China Australia Free Trade Agreement, initiatives included promoting tourism to Australia and few discussions on steel decarbonisation.
Despite the modest nature of the visit, it was subjected to criticism by certain sections of the national-security establishment and the media. They have conveyed a distinct message that even minimal diplomatic collaboration with China is now deemed unacceptable. Severe obstacles are looming for the Australian capitalist system. There appears to be no viable substitute for Australia’s heavy reliance on trade with China.
While the tariffs imposed on Australian exports under Trump’s reciprocal tariffs regime have remained low at 10%, additional tariffs on pharmaceutical goods and aluminium could pose severe challenges. Australia is also indirectly vulnerable, as any reduction in China’s economic activities due to Trump’s economic war could significantly decrease the market for Australian exports.
During its first term, the Labor-led government under Albanese made considerable progress in transforming Australia into a frontline state in a possible war against China, including substantial expansion of US military facilities. The level of integration is such that the country’s Defence Minister, Richard Marles, early this year openly recognized that in case of a US-led conflict with China, Australia would be automatically implicated.
The demands are escalating, as evidenced by the Trump administration’s public insistence on Australia’s explicit commitment to participate in such a war, coupled with the calls for an increase in military spending. The Labor party’s election narrative that Australia could hold itself apart from mounting global disorder continuously proves to be a false assurance.
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