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Kasvi Batra
20 July 2025 |
The following note was earlier published in The World This Week #319 & 320 Vol 7, No 28 & 29, 20 July 2025
Australian PM Albanese’s visit to China:
Balancing Economic Interests, Strategic Tensions and a Soft Power Recalibration
Kasvi Batra
What happened?
On 12 July, Australian Prime Minister Antony Albanese reached China for a six-day visit at the invitation of Premier Li Qiang to participate in the Annual Leaders’ Meeting.
On 13 July, the two countries signed a MoU between Tourism Australia and Trip.com Group. On the same day, PM Albanese attended a Steel Decarbonization Round Table, where it was agreed to establish a new policy dialogue on steel decarbonization.
On 15 July, Prime Minister Anthony Albanese guest-chaired the eighth Australia–China CEO Roundtable alongside Chinese Premier Li Qiang. PM Albanese and Premier Li Qiang also held the Annual Leaders Meeting, reaffirming their support for the Comprehensive Strategic Partnership and the 1972 Joint Communiqué. Both sides emphasized the value of people-to-people exchanges in strengthening ties and reiterated Australia’s commitment to the One China Policy.
Also on the same day, both countries several key agreements including the following:the Memorandum of Understanding on the Implementation and Review of the China-Australia Free Trade Agreement in 2025–2026 and the Memorandum of Understanding on Tourism Cooperation. A Strategic Cooperation Agreement between China Media Group and Tourism Australia was also signed. Additionally, three MOUs were concluded between China's General Administration of Customs and Australia's Department of Agriculture on phytosanitary protocols.
On 15 July, PM met President Xi Jinping. Albanese reaffirmed Australia's commitment to the One China Policy while emphasizing support for maintaining the status quo in Taiwan. During his opening remarks Xi stated “seeking common ground while setting aside differences is in line with “the fundamental interests of our two countries and our two peoples no matter how the international landscape may evolve, we should uphold this overall direction unswervingly”
What is the background?
First, a brief overview of China and Australia’s trade relations. China is Australia’s largest trading partner, with nearly 25 per cent of Australian exports going to China. China also accounts for around 4 per cent of total FDI into Australia, investing in mining, healthcare, and infrastructure. The China-Australia Free Trade Agreement (ChAFTA), in effect since 2015, has improved agricultural market access, enhanced service access for Australian providers in China, raised investment thresholds for Chinese private companies in sensitive sectors, and enabled faster customs clearance. ChAFTA has significantly boosted Australian exports of iron ore, natural gas, and agricultural products
Second, the recent challenges in Australia and China relationship. During 2018 -24, Australia-China relations saw significant tensions. In 2018, Australia blacklisted Huawei and ZTE from 5G network rollout and passed a foreign interference law, widely viewed as targeting China. In 2020, Australia’s call for a COVID-19 origins inquiry led to a trade dispute, with China imposing tariffs and import bans on key Australian exports like barley, beef, wine, and coal. Australia responded with its own measures, including blocking Chinese acquisitions and launching anti-dumping probes. The trade war gradually eased through bilateral negotiations, with China lifting major restrictions between 2023 and 2024, and Australia dropping its WTO complaints.
Third, the people to people ties. Australia remains a top destination for Chinese students. To strengthen ties, both countries established the Australia–China High Level Dialogue in 2014, fostering exchange across sectors. In 2020, the National Foundation for Australia–China Relations was set up to promote constructive engagement through programs, expertise, and grants supporting bilateral cooperation.
What does it mean?
First, the reopening of high-level dialogue between Australia and China. After years of tensions over foreign interference laws, COVID origins, AUKUS, and trade barriers, the resumption of key dialogue frameworks such as Annual leaders meet institutionalizes long term cooperation. The visit has also renewed economic ties between Australia and China, with most tariffs and informal bans lifted. The new policy dialogue on decarbonization also positions Australia as a key partner in China’s efforts to green its supply chain.
Second, the visit marks a strategic recalibration and could serve as a model for Pacific states with strong trade ties to China. Prime Minister Albanese secured broad trade agreements without offering concessions on Australia’s internal security, balancing economic engagement with national interests.
About the AuthorKasvi Batra is a Research intern at National Institute of Advanced Studies (NIAS).
