This Is Why There Is Prime African Opportunity Between Waning Sino-Australian Relations

By Amodani Gariba

Chinese and Australian head of state standing in front of flags
Credit: Australian Institute of International Affairs

Until recently, Australia, amongst all the well-known liberal democracies, had a buoyant economic relation with China. In 2016 during a state visit of then, Prime Minister of Australia, Michael Turnbull, Chinese president Xi Jinping, together with his counterpart, announced an intensification of Sino-Australian relations. The two leaders officially rebranded the cooperation between their countries as a ‘Comprehensive Strategic Partnership’.  China had been Australia’s largest trading partner accounting for 32% of total trade. This economic cooperation provided Australia with a special niche in China’s economy. However, this cooperation is fast unraveling in the wake of the coronavirus pandemic. 

In what China described as foreign interference, Beijing has economically sanctioned Australia for calling for an independent probe into the origin of COVID-19. Beijing’s announcement has had a cascading effect with a heated economic and diplomatic tit-for-tat between the two countries. This article explores how the strained relations could urge China to reduce its dependence on Australia, possibly looking to countries like Guinea and Ghana as a replacement. 

A Love-Hate Affair

Sino-Australian relation is a mixture of love and hate. It is a rollercoaster ride, that perhaps promises no end. In 1949, Australia refused the proposal of the UK to recognize the Peoples Republic of China (PRC). UK, Denmark, France, and some other European nations acknowledged the new reality in China following the defeat of the Chang Kai Shek. The US, which fears the rise of communism, refused to recognize PRC. The US position probably influenced that of Australia.  However, by 1972, Australia had ditched the US to recognize PRC. Following the opening of the country by Deng Xiaoping, China has benefitted from Australia’s investments. Australia too has benefitted from Chinese investment in its mining industry. 

While economic cooperation blossomed, political interaction between the two is best viewed as a love-hate affair, until recently when all things went berserk. Following the proposal of Prime Minister Shinzo Abe, Australia, the US, India, and Japan formed an informal forum called the Quadrilateral Security Dialogue. PRC issued a strong diplomatic protest to all four-member countries. One year later, Australia pulled out as Kevin Rudd replaced John Howard as Prime Minister. The whole arrangement fell apart due to the outcomes of internal politics in member countries. For instance, Shinzo Abe, the forum’s chief architect was replaced as the Japanese Prime Minister.

Even before the Quadrilateral, John Howard entertained the Dalai Lama. Moreover, despite Kevin Rudd’s pro-China Posture, he granted Visa to Uighur leader, Rebiya Kadeer, to attend the Melbourne International film festival in 2009. 

Julia Gillard, who replaced Kevin Rudd as prime minister, shifted more to the US, with a revival of interest in the Quadrilateral, aside hosting US soldiers. Succeeding Julia Gillard was Tony Abbot. During his reign, the balance tilted towards Beijing. He hosted President Xi Jinping and finalized a free trade agreement between his country and China. 

Under Malcolm Turnbull, Sino-Australian relations took another dip and have yet to recover. A return to normal is not likely soon, as tension only keeps escalating. In 2016, Australia issued a joint statement with Japan and the US, urging China to accept the ruling of a tribunal, which rejected Beijing’s claim in the South China Sea. That not sufficing, Australia joined talks to reinvigorate the Quadrilateral. Prime Minister Turnbull also ordered an investigation into alleged Chinese meddling in Australia’s domestic politics, which ultimately culminated in the banning of Huawei from Australia 5G rollout.

Scott Morrison took over in 2018 and in 2019signed a joint statement with 22 other UN members to condemn China on Xinjiang. However, it was not until the pandemic that relations between the two countries took a huge bend. Australia’s call for an independent inquiry into the causes of COVID-19 has provoked retaliation from Beijing that threatens to undo every economic milestone chalked by the two countries. Beijing has imposed 80% tariff on Australia’s barley exports, as well as banning the importation of beef from Australia. 

How Have Sino-Australia Relations Been Mutually Beneficial?

Australia has been balancing its long-standing alliance with the US with its increasing economic cooperation with China, without jeopardizing any.  Nevertheless, this balance would be difficult to achieve going forward.  

Observing how issues were unfolding, it would not come as a surprise if an analyst predicts a dip in economic cooperation between the two. However, bilateral trade defied political disagreements between the two, to grow year on year. In 2019, trade between the two countries reached an all-time high of $160 billion.  

In Australia, China found a cheaper source of bauxite and iron for its heavy manufacturing industry. This provided Australia with an important niche in the Chinese economy that China can not replace easily. China Iron and Steel Association acknowledge that it may take 4 to 5 years for alternative sources to fully develop. However, China’s post-pandemic recovery also depends on infrastructural development, which also relies on Australia’s mineral exports. 

Therefore, China finds itself in a delicate position. Would it sacrifice economic gains for political supremacy or do the reverse? However, we know for China’s Communist Party, politics, always comes first. 

Could Africa Be The Alternative?

Long before the escalation in tension, China signed deals in Africa for Bauxite. In 2018, China’s state-owned Sino hydro signed a $2billion infrastructure for a Bauxite deal with Ghana’s government. This deal will have Sino hydro building an elaborate transport infrastructure across the country, while Ghana pays for it with bauxite for 15 years. 

A year before that, China agreed to give Guinea $20 billion long term financing in exchange for Bauxite concessions in the country. It is interesting to note that Guinea has the largest reserve of Bauxite worldwide. When bauxite from both countries comes on stream, it is going to be a game-changer for Sino-Australia relations. 

Going Forward

China is a country that learns from its experience. Ten years ago, Africa accounted for 30 percent of China’s total oil imports. Today, the percentage has reduced drastically to about 18. Save Angola, which still has to supply China with oil to settle some infrastructure debt, the percentage would have been much lower. China has diversified its oil sources by cutting down its dependence on African oil. China now partly relies on the Middle East for oil. As tension keeps escalating, it is evident that China drawing upon the experiences with Africa’s oil.

As Chinese demand for African oil is dwindling, its demand for African bauxite and iron is likely to go up. Herein lies the window of opportunity for African countries with reserves. As an alternative to Australia, China is going to prefer African bauxite to Brazil due to politics and economic reasons. China already has a very good relationship with African governments, compared to Brazil, especially under Jair Bolsonaro. Moreover, because Africa is closer to China than Brazil, the transit duration will be lower, cutting down on overall haulage costs. As political tensions result in China scaling down investment in Australia’s minerals, these investments will make their way to Africa. However, Africa must not repeat the mistakes that happened with its oil. Benefits from the ‘new oil’ must devolve to the base, so that everyone could derive some benefit. Unlike the old oil, this new oil must unify, and not sow seeds of discord.

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