China and the World

Trading blows

China spars with Australia in Pacific security deals

Graham-Fletcher-w

Fletcher: Australia’s ambassador

For the past 20 months Chinese-Australian TV presenter Cheng Lei has been detained in Beijing, accused of revealing state secrets.

Cheng, who is 46, was arrested in August 2020 when she was working for a business show on China’s state broadcaster CGTN. Her case finally reached court at a closed-door hearing on March 31, which ended three hours later with officials promising a verdict “at a scheduled date”.

Australian Ambassador Graham Fletcher, who was denied entry to the hearing on national security grounds, protested outside the court that there was no information about the allegations against Cheng. “That is part of the reason why we’re so concerned, because we have no basis on which to understand why she’s been detained,” he added.

Cheng’s case is another flashpoint in a diplomatic relationship that has deteriorated remarkably since mid-2020 when Australian Prime Minister Scott Morrison called for an independent investigation into the origins of the Covid-19 pandemic.

Tensions between the two governments have shown little sign of improving since then, especially when Australia announced it was joining a new military pact with the United States and the UK, which angered the Chinese government (see WiC557).

Beijing has accused the trio of Five Eyes countries of trying to replicate NATO in the Pacific. On the other hand, intelligence officers in Australia have been rattled by a planned security deal between the Solomon Islands and China, which could pave the way eventually for a  Chinese naval base.

Morrison continues to take a combative stance on dialogue between the two governments, refusing recently to meet China’s new ambassador to Australia until Beijing lifts its own block on ministerial meetings. “That would be a demonstration of weakness and I can assure you as prime minister that’s the last message I’d ever send to China,” he said of his decision.

In the meantime, Australian exporters have borne the brunt of the damage as trade with China has withered. Although sales of iron ore proved resilient, exporters of goods such as coal, wine and beef have all suffered from tariffs and trade restrictions imposed by the Chinese.

China is the largest customer for Australian goods by a huge distance (in export terms it was about three times the size of second-placed market Japan in 2020, when the political mood started to darken). So Canberra has been trying to find a broader range of buyers in a bid to reduce that dependence.

As part of that push the Australians have just signed another trade deal with India, following more than a decade of negotiations. It will cut tariffs on a range of Australian exports, including coal, lobster, sheep meat and wool, with phased reductions for wine and agricultural products such as avocados, cherries, oranges and strawberries.

The Chinese reject the allegations that they have been trying to whip the Australians into line through trade restrictions. “Instead of correcting its own mistakes, Australia has been labelling China’s normal trade practices as ‘economic coercion’, while ignoring the fact that it is Australia that actually banned Chinese investments, cracked down on Chinese companies and tore up business agreements with China,” the Global Times complained in an editorial last month. It added that Canberra was the first government to ban Huawei’s 5G networks and that the number of its anti-dumping and anti-subsidy investigations into Chinese products exceeds that of Chinese trade measures against Australian goods.

However, there were words of support for the Australians this month from Yamagami Shingo, Japan’s ambassador to Australia, who also warned against putting “too many eggs in one basket” by drawing comparison with the way that the Japanese had diversified their supply chains away from China after 2010, when their companies ran into difficulties sourcing exports of rare earth materials.

“And this is, I think, exactly something that our friends in Australia are learning throughout the recent lessons of wine or coal or barley, timber, lobster… all those products which have been subjected to economic coercion,” he added.


© ChinTell Ltd. All rights reserved.

Sponsored by HSBC.

The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.