Australia’s Albanese will visit Beijing with wine tariffs, thawing ties front of mind

Bilateral ties previously hit a low over trade disputes, the detention of two Australians in China and the origins of the Covid-19 pandemic
But a change in Australia’s federal government last year has led China to reassess its foreign-policy interests in the region

Michelle Grattan

Published: 2:00pm, 27 Oct 2023

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The defrost in relations between China and Australia started cautiously after Canberra’s change of federal government last year. It then sped up, culminating in the announcement last weekend of the much-anticipated visit by Australian Prime Minister Anthony Albanese to China.

The bilateral relationship appears to be heading back to room temperature fast.

During Albanese’s visit from November 4 to 7, he will hold talks with Chinese President Xi Jinping and Premier Li Qiang, and also attend the China International Import Expo in Shanghai.

Ahead of the announcement, both countries have taken major steps to improve ties. First came the release of Australian journalist Cheng Lei, who was previously detained in China for three years, although Australian writer Yang Hengjun remains in Chinese detention. This was followed by Albanese’s announcement that China would conduct a five-month review of its tariffs on Australian wine, which prompted Australia to file a complaint at the World Trade Organization (WTO) in 2021.

Chinese-Australian journalist Cheng Lei (left) hugs Australia’s Minister for Foreign Affairs Penny Wong at Tullamarine Airport on October 11. Photo: AP

In the meantime, Canberra has promised to suspend its WTO action, but Albanese said “if the duties are not removed at the end of the review, Australia will resume the dispute in the WTO. We are confident of a successful outcome”.

Breaking the impasse on wine is a big deal for producers. Before the duties came into effect, China was Australia’s largest wine export market.

The lack of access to China has been devastating for many in the Australian wine industry, with exports to the mainland falling from US$1.1 billion in 2019 to US$16 million in 2022. Unlike China’s halting of imports of Australian commodities such as coal, for which Australia can find alternative markets, its wine producers have had trouble selling their products elsewhere.

Bottles of wine imported from Australia are displayed for sale at a supermarket in Nantong Free Trade Zone in China’s Jiangsu Province. Photo: Getty Images

China’s trade restrictions against Australia amounted to some US$20 billion at their peak in 2020, but have fallen to about US$2 billion. China is Australia’s largest trading partner, representing nearly a third of its total trade.

Albanese’s visit to China will be the first by an Australian prime minister since Malcolm Turnbull’s trip in 2016. It will also come 50 years after former prime minister Gough Whitlam’s historic visit to the Asian giant, the first by an Australian leader.

Whitlam told a banquet in Beijing on October 31, 1973: “In China today, we see a great modernising force, capable of exerting profound influence in the world. Close cooperation and association between our two peoples is both natural and beneficial.”

Albanese said last Sunday that Whitlam’s trip “laid the groundwork for the diplomatic, economic and cultural ties that continue to benefit our countries today”.

03:33

China and Australia hold high-level talks after 3-year break

Over the decades, the relationship has been enormously important economically for Australia but at times has been very rocky. Relations worsened when Australia led international pressure for an inquiry into the origins of Covid-19 and China’s handling of the crisis at the start of the pandemic.

The bilateral thaw has been driven by China’s perception of its wider foreign policy interests, after the change in Australia’s government last year.

But Albanese and Foreign Minister Penny Wong have remained cautious about the relationship amid tensions between the US and mainland China, the Taiwan issue and Beijing’s courting of small Pacific countries. They have maintained that Canberra would disagree with Beijing from time to time, taking into account Australia’s national interests.

Mike Burgess, head of the Australian Security Intelligence Organisation, has highlighted China’s unrelenting spying activities, citing an alleged attempt by a visiting professor recently to “infiltrate a prestigious Australian research institution”.

Among the topics of discussion during Albanese’s visit will be economic cooperation, climate change, and people-to-people ties. He will be accompanied by Trade Minister Don Farrell, who has been closely involved in negotiations with China to remove its trade restrictions.

Speaking to journalists before leaving on Sunday for his visit this week to the United States, Albanese said: “It is important that we stabilise our relationship with China. That is in the interests of Australia and China, and it is indeed in the interests of the world, that we have stable relations, and that is what this visit will represent.”

In Washington, Albanese was set to hold discussions with US President Joe Biden on legislation issues related to the Aukus agreement and Australia’s clean-energy drive.

Asked whether he hoped Xi would visit Australia, Albanese said both sides would hold discussions about the issue, noting that the Chinese leader had been to the country several times.

Michelle Grattan is a professorial fellow at the University of Canberra in Australia. She has been a member of the Canberra parliamentary press gallery for more than 40 years. This article was first published by The Conversation.