China and Australia still need each other, and their interest in clean energy may just clear the slate
- Although their political rivalry and trade quarrels persist, a decoupling between Canberra and Beijing is ‘neither practical nor realistic’
- While there might not be a ‘silver bullet’ to reset relations, they share a common goal of curbing climate change while guarding against energy crises
In the burgeoning realm of new and renewable energy, China and Australia seem “destined” for greater collaboration, as each has critical resources that the other needs in their long-term plans to curb carbon emissions and ensure a sustainable supply of power for the people.
And such mutually beneficial exchanges may be just the catalyst needed to get their rocky relations back on sound footing after a prolonged stretch of bilateral bickering and finger-pointing.
At least that is the hope of Liu Ming, who has a bit of skin in the game as CEO of Melbourne-based Dimer Technology, which specialises in low-carbon gas processing and renewable-energy development.
Australia cannot meet its carbon-reduction targets without technology and engineering resources from overseas, including from China, while Australia also has essential materials that will help both countries develop and expand their relevant capabilities and capacity in new energy, he contends.
“We have seen the dynamically growing bilateral investment and trade in this field,” Liu said. “This kind of growth can help improve and stabilise the bilateral political relationship.”
As China’s new-energy push accelerates, can it be a stable economic engine?
The mega trade partners have not seen eye-to-eye for more than two-and-a-half years, dating back to the early days of the pandemic when Canberra called for an investigation into the origin of the coronavirus, provoking the ire of Beijing.
What followed – sanctions, tit-for-tat tariffs and no shortage of nationalistic sentiment – dragged their ties to an all-time low, with little real effort seen by either side to make amends.
But with December set to mark 50 years since China and Australia established diplomatic relations, there have been signals that their still-strong economic ties could help Beijing and Canberra find common ground on which to mend political fences.
Despite their squabbling, Australia still relies on China’s vast market and commercialisation of technology, while China remains heavily dependent on imports of Australian raw materials for its stable, long-term economic growth.
Xu Qinhua, a professor of international political economy and international relations with Renmin University’s School of International Studies, says there is “huge potential” for China and Australia to collaborate in their bids to curb choking emissions that pose a danger to the world at large.
For its part, Dimer’s firm is currently working with China Petroleum & Chemical Corporation (Sinopec), the country’s largest oil distiller and petrochemicals producer, on projects that aim to both reduce carbon dioxide emissions and produce hydrogen – a renewable clean-burning fuel.
David Olsson, national president and chairman of the Australia China Business Council, which represents 700 member organisations, said the half-century anniversary offers a chance to examine what their relationship can offer both countries over the next 10, 20 or even 50 years.
“There are many areas where Australia’s expertise is valued in addressing climate challenge – managing low-carbon food chains, deploying world-class expertise in land, water management and in green-building design,” he added.
China-Australia ties not close to a reset, says envoy urging caution on Taiwan
In the report, Neil Wang, CEO of New South Wales-based Foton Mobility, pointed to challenges facing his firm, which relies on Chinese technology for the hydrogen buses and electric trucks it produces. These hurdles include “a shortage of labour and a lack of familiarity with hydrogen buses and their components”.
While Australia has just two hydrogen-powered buses in operation, China already has about 1,100, making its technology and expertise invaluable.
Meanwhile, China relies on imports of Australian resources such as lithium. In fact, the vast majority of Australian lithium goes to China, and the percentage keeps rising – from 85 per cent last year to 94 per cent this year, according to the latest figures released in August by the Australian Bureau of Statistics.
In May, Tianqi Lithium Energy Australia, a joint venture between IGO in West Australia and Chengdu-based Tianqi Lithium, produced Australia’s first battery-grade lithium hydroxide at its plant in Western Australia’s Kwinana city, according to the regional government, which said the raw material will be exported.
Why iron ore is crucial in China’s infrastructure boom
China is also tethered to its need for Australian iron ore – an essential raw material in producing high-quality steel for infrastructure – making it the bellwether of the trading relationship between the two countries.
China has been Australia’s largest trade partner since 2009. The trade volume over the past half-century has risen from less than US$100 million in 1972 to more than US$207 billion last year, when it accounted for 34.2 per cent of Australia’s total trade, according to official figures.
09:20
Trade ‘only one part of the battle‘ in China-Australia dispute, says legal expert Bryan Mercurio
To that end, Ciara Morris, a China fellow at the non-profit organisation Young Australians in International Affairs, said working together to combat climate change is “a great example” of the enhanced communication and mutually beneficial strategic cooperation being employed between China and Australia.
Nonetheless, tensions between the countries continue to loom large. And it is unclear how or if their relationship could ever return to the way it used to be, particularly with so much damage already done.
For instance, Beijing’s economic retaliation has cost billions of dollars worth of Australian exports, crippling certain industries amid allegations of dumping and other trade violations. Products affected included wine, coal, beef, lobsters, log timber and barley.
“I doubt there is a silver bullet that can ‘reset’ the bilateral relationship to the way it was pre-2018,” Morris added.
Australian firms seek ‘practical ways’ to boost China trade, economic ties
But despite the tumult between them, China remains an “important trading partner” for Australia and will remain so in the face of headwinds ranging from coronavirus lockdowns to supply-chain disruptions, a senior government official said just last week.
“It’s such an enormous economy. It will be almost unimaginable to think that that importance will decrease significantly,” said Elisabeth Bowes, chief negotiator with the Regional Trade Agreements Division under the Department of Foreign Affairs and Trade, according to a Bloomberg report.
However, that does not mean Australia has not been taking steps to protect itself, as it has seen how dangerous it can be to rely so heavily on a single country for trade.
“[Beijing’s punitive trade actions] have highlighted the risks in market concentration and really highlighted the importance of diversity of markets and in products and services that Australia exports and imports,” Bowes said. “We’re looking at delivering new agreements. That is a very key plank of the government’s trade diversification agenda.”
Bowes’ comments came about a week after China’s ambassador to Australia, Xiao Qian, was quoted by The Sydney Morning Herald as saying that efforts to reset the relationship were off to a “good start” under the new Labor government, but were still too “slow” from China’s perspective.
He pointed to tensions over Taiwan and the treatment of Muslims in China’s Xinjiang Uygur autonomous region as the two major barriers to resetting bilateral ties.
‘Fear of looking weak on China’, election won’t help Australia’s exporters
According to another diplomatic source who spoke with the Post, bilateral contact has improved since the new Australian government took power in May, and there have been signs of improving ties between the two countries.
“But, in reality, there has been a lack of concrete moves,” the source said, declining to be named. “China is still largely playing the blame game, while the Australian side wants to move on.”
After the meeting, the Chinese minister said in a statement that he had emphasised the importance of stable bilateral ties during the talk with Wong, which he said ought to be more resilient and not be prone to “accidents”, given their 50 years of diplomatic relations.
Mercedes Page, a fellow with the Schmidt Futures International Strategy Forum (Asia), said that dropping its trade sanctions is the first step that China must take to improve the bilateral relationship, given that renewable energy and efforts to mitigate climate change are opportunities for cooperation.
Who knows, maybe Xi Jinping and Anthony Albanese can meet during the upcoming G20 meetings in Bali
And Olsson at the Australia China Business Council said that there are many collaborations on renewable energy “already under way”, at the business level, but “it is still early days” at the government level.
“Access for Australian diplomats in China has improved slightly in recent times, but more broadly, we are still in the early stages of trying to assess the parameters within which the two countries can interact,” he added.
