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Australia and China need a circuit-breaker

Just like Whitlam's visit 50 years ago, Australia needs a circuit-breaker in its deteriorating relationship with its major economic partner. Who could serve as envoy for a realist reset to ensure mutual benefits rather than mutual recriminations in the Australia China relationship? Kevin Rudd? John Howard?

Following the historic 1971 visit to China by former Australian prime minister Gough Whitlam, while he was still opposition leader, Australia and China enjoyed mutual benefits from trade, education and people to people links over decades.

Today, after a series of disputes, Australia and China have a relationship without communication, without a goal and without much hope. Each side blames the other for the deterioration in bilateral relations, but such a stance reduces the strategic options for finding a common ground solution. It’s natural for the two countries to have different political and strategic outlooks, but a circuit breaker is needed to reset relations.

There are no signs of any moves to improve Australia-China relations. Nowhere is this more apparent than in trade. Ask Australia’s lobster exporters, now effectively shut out of the Chinese mainland market. Or Australian exporters of coal, barley, beef, wine and other products now facing trade barriers in the world’s biggest import market. The United States and other exporters are rushing in to fill the gaps left by Australian exporters in China’s huge market.

How smart was it to allow bilateral relations to deteriorate to such an extent? In response, it certainly makes sense for Australian exporters to diversify and not to rely entirely on the mainland China market, but no other country in the region has a middle-income group as big as in China, as hungry for Australia’s premium seafood and agricultural products, or as thirsty for Australian wine. In time, Australian workers and businesses are going to need and seek access to the China market.

Even if a government in Canberra in future plans to re-negotiate the terms of the relationship to meet both countries’ needs, it may prove difficult to repair the damage done on both sides. A politically risk-averse opposition, led by Anthony Albanese, does not enjoy the conditions that allowed the trailblazing Whitlam visit to China 50 years ago. That initiative followed years of Whitlam articulating a more independent, interests-based Australian foreign policy to find its way to live with Asia, rather than to fear Asia.

These days, there is little space for such lofty aims, with political initiatives judged within a 24-hour news cycle rather than over the course of months or years.

Whitlam’s historic visit to China would not have been nearly as significant, in retrospect, had it not been followed soon after by then US national security adviser Henry Kissinger, the arch-realist, pursuing US interests in working with, rather than against, China. The US may again seek a reset in its relations with China.

After Whitlam was elected Australian prime minister, and even under successive Australian governments, Canberra pursued normal relations with China ahead of the US establishing formal diplomatic relations with China by removing its veto on China at the United Nations and, decades later, welcoming China into the World Trade Organization.

Even after changes in government, Australia pursued Asia-Pacific trade liberalization and pragmatic relations with China. Australian workers and businesses were huge beneficiaries from the trade, investment, tourism and education links with China that flowed from that policy pragmatism.

Sooner or later, an Australian government might seek a new, mutual interest-based bargain with China, carefully negotiated by an updated version of a Whitlam - or Kissinger - style visit. The stakes are very high now, and both countries are much more important to each other than half a century ago.

Australia’s economy remains highly complementary to China’s and, as China continues to get richer, it is clearly in Australia’s economic and security interests to hold a hard-nosed, realist negotiation to find a way for both countries to live with each other, without interference, and to benefit from each other’s growth and prosperity.

Australian foreign policy swings between, at times, a traditional, one-eyed geopolitical allegiance to the United States regardless of the issue and, at other times, a more nuanced support for US global leadership but within multilateral rules and norms that work for all countries. At times Australia focuses on constructive engagement with Asia, at other times it swings back to see the world through the eyes of its traditional cultural ties beyond its region.

Australia is likely to remain committed to free trade, openness to foreign investment and multilateral dispute settlement. That means finding a pragmatic way to build mutually beneficial relationships with all countries in the region. In the medium term, Australia will likely contribute to developing a new, pragmatic cooperative security balance in the Asia-Pacific region based on confidence-building guarantees to stabilize the region, rather than driving it toward conflict.

In the long run, there cannot be only one winner, and that applies to both China and the US no matter how much it disappoints the hawks on all sides. In the Asia-Pacific region, most people realize they are not living in an era of zero-sum games, but in times when they have to learn to live and thrive together. That is possible between Australia and China. We just need to start talking again to find the way forward.

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