As China trade tensions intensify, Australia must urgently rethink its approach

Australia has a population of approximately 25 million people, and so for our social, political and economic stability, and to grow our domestic economy, it is crucial that we export.

Therefore, our relationship with our largest trading partner, China, is critical. The People’s Republic of China is one of the few countries in our region wealthy enough to pay the prices we want for our high-value export products. Not only is China in the position to pay high prices for our boutique products, but it also has a population of 1.4 billion people, giving it huge purchasing power. 

One of the proposed solutions to the trade tensions with China is the diversification of our export markets. There is nothing wrong with the idea of diversification in trade. However, while we are looking at diversifying, we need to remember that we have a long-standing trade relationship with China, which has taken many years and resources to develop.

Expanding our export markets is a long and expensive process. Any diversification or trade that seeks to replace China as a key market for Australian products will require much investment, and many years to achieve anything like a replacement of the China export market.

To recover the Australia – China trading relationship from this critical point, we need to show more diplomacy than is being currently displayed. The kind of diplomacy to use is not megaphone diplomacy that is targeted largely at a domestic audience. Rather the route to relationship recovery is a less public and more private style of diplomacy.

There is also a need for a more proactive stye of communication, rather than just waiting for China to phone Australia. Recovery of this relationship urgently requires an informed, full, and fearless reaching out that none of the current politicians seem able to comprehend. The current reactive approach shows only a profound lack of knowledge of China and the ways it negotiates that are embedded in all aspects of life, business, and politics.

This demonstrated lack of knowledge leaves Australia vulnerable as an easy target.

Since nothing we are doing is improving our relationship with China, we urgently need to step back and engage in some deep reflection. It is not sufficient to say Chinese people should understand our negotiating style. They do – think of the thousands of Chinese students who have studied business and commerce in Australia.

In this trading relationship China is the dominant partner, and Australia is the minor partner. We need China. With a few exceptions, China does not need us. 

The way Australia’s most public figures are trying to communicate with or about China is not working and has not done so for months. As cliche as it may be, we all know that if you are engaging in a particular behaviour that is not getting the results you want there is a need to try something different. 

This ‘something different’ means learning about three critical aspects of Chinese life, business, and political culture, which are “face”, “guanxi” and the 36 Chinese Strategies.

“Face” is not about embarrassment, but rather how you are seen in front of other people. By so very publicly demanding the investigation into the origins of COVID-19, Prime Minister Scott Morrison caused China considerable loss of “face”. “Guanxi” is about relationships; visits to China are critical in developing “guanxi”. The 36 Chinese Strategies, which are derived from Sun Tzu’s famous text  The Art of War, are often described as the core of Chinese thinking.

These three fundamental elements are deeply embedded in Chinese politics, business, and trade, and across all facets of everyday life. Without a good working understanding of these cultural points, Australia has little chance of working out a useful China strategy. 

As someone who has worked in the China space for 25 years, it is obvious that without this knowledge, Australia’s relationship with its largest trading partner is only going to worsen, putting Australian businesses, the economy and lifestyle at risk.