Australia’s trade chief said that the wait for the first meeting with his Chinese counterpart is likely to extend beyond this month because Beijing’s top negotiator will skip a gathering of trade minsters in Indonesia next week.
The government of Prime Minister Anthony Albanese, which came to power in late May, is seeking to stabilize Australia’s relationship with the world’s second-largest economy and negotiate a recovery in exports, said Don Farrell, the country’s minister for trade and tourism.
Albanese wants to avoid the “megaphone diplomacy” that marked the approach of the previous government, but also won’t take any action that weakens national security or abandons concerns about human rights and China’s arrests of Australian citizens, Farrell said.
“We want to resolve these disputes by discussions with our Chinese counterparts, and we stand ready to talk at any stage with them, about them,” Farrell said in an interview with Bloomberg News on Friday in Los Angeles, on the sidelines of a meeting of Indo-Pacific trade ministers. “I suppose it’s a case of trying to tone the discussion down so that we can each express our points of view.”
Australia has been attempting to repair damaged diplomatic relations with its largest trading partner since Albanese’s center-left Labor Party won a national election. While little progress has been made so far, the Chinese ambassador to Australia has also been calling for a reset, in a sign of thaw.
Former Prime Minister Scott Morrison’s call for a global probe into the origins of Covid-19 stoked anger from China, which responded with blocks on a raft of Australian exports. While pushing trade with China, Morrison also took a more confrontational tone with Beijing, embracing instead Australia’s relationship with the US.
The previous government’s policies created “a more difficult environment for us to resolve these problems,” Farrell said.
Farrell touted his country’s products including wine, barley, meat and crayfish, saying that Australia would like to be able to sell them again to the nation of 1.4 billion people.
Most China-Reliant Economy
Despite the friction, China purchased 45% of Australian exports last year, compared with just 14% for second-place Japan, according to data from the International Monetary Fund compiled by Bloomberg. That’s up from 37% in 2017, the year before Morrison took office.
Likewise, 28% of Australia’s imports come from China, compared with 16% from the European Union, the next largest source of foreign goods. The percentage has increased from 23% in 2017.
The country is often described as the world’s most China-reliant economy, and Morrison’s treasurer, Josh Frydenberg, told Bloomberg shortly before this year’s election that he was trying to reduce that dependence.
Morrison’s government pursued a strategy that “put all our eggs in the China basket,” Farrell said after two days of US-hosted talks among 14 nations for the Indo-Pacific Economic Framework. “It’s made us vulnerable to trade blockages,” he said. “We’ve got to diversify and broaden our trading horizons, and this is a really good way to do it,” he said of the nascent regional initiative known as IPEF.
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Farrell noted that Australia’s defense and foreign ministers have met with their Chinese counterparts and said that he tried unsuccessfully to meet with Minister of Commerce Wang Wentao at the World Trade Organization ministerial conference in Geneva, Switzerland in June. That was just weeks after Farrell, 68 and a longtime union leader and senator, took office.
With China’s once-in-five-years Communist Party Congress approaching next month, the likelihood of talks taking place any time soon may be diminished.
China’s Covid Zero strategy, which effectively bars Chinese from traveling outside of the country, is also dragging on Australia’s tourism and education sectors, Farrell said. The arrest of a number of Australian citizens in China continues to be an irritant between the two nations. China has detained Cheng Lei, a Chinese-born Australian journalist who worked for state broadcaster CGTN, while Australian writer Yang Hengjun was arrested in 2021.
Separately, Farrell touted Australia’s advantage when it comes to the US Inflation Reduction Act, part of which is aimed at curbing China’s influence in the electric-vehicle supply chain. The legislation will “significantly benefit” Australia by creating an incentive for car- and battery-makers to source raw materials needed in EVs from countries that have free trade agreements with the US.
Climate change was a key theme in Australia’s recent election, and the Albanese government has pledged to speed up the reduction of greenhouse gas emissions. Australia’s parliament on Thursday passed a law to reduce emissions by 43% over the next eight years and to reach net zero by 2050.
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Pushing hydrogen as a resource could help with that effort, Farrell said Friday.
Prior to the pandemic, Australia’s hospitality and services sectors relied heavily on overseas students and young travelers, including from the US. Despite the country’s strict Covid border regime being dismantled, Farrell said in the interview that the high cost of airfares and a lack of flight capacity means many of these workers had visas but were unable to get to the country, fueling a labor crisis.
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Australia announced a trade deal with the UK last year, and it should have been completed under the previous government, Farrell said. He said Liz Truss becoming Britain’s new prime minister was positive for the pact, given her prior experience as secretary of state for international trade, including leadership of negotiations with Australia.
Farrell said a final report on the deal by an Australian parliamentary committee is due mid-November.
©2022 Bloomberg L.P.
