RBA governor urges Australia and China to maintain strong relations
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Reserve Bank governor Philip Lowe has urged Australia to maintain a strong relationship with China, as Beijing and Canberra lay responsibility for the diplomatic fracture on each other.
In his most direct comments on the multi-billion dollar diplomatic dispute to date, Dr Lowe called for the relationship between Australia and its largest trading partner to get back on track.
Reserve Bank Governor Philip Lowe. Credit:Bloomberg
“China has benefited from our natural resources exports and we have benefited from its manufacturing imports," he said.
“We need to keep that strong relationship with China going. It is mutually advantageous for both of us.”
The comments follow Treasurer Josh Frydenberg’s offer of renewed engagement with Beijing on Wednesday, as diplomats grapple with twin objectives: maintaining a military deterrent to China’s regional aggression through a new defence agreement with Japan, while keeping economic lines with China open.
Mr Frydenberg told The Australian’s Strategic Forum on Wednesday that Australia stood ready to engage in “respectful and beneficial” dialogue with the Chinese Communist Party.
“The fact that we have different political systems and different values means we will not always agree. That is not new. But despite our differences, we are committed to maintaining a strong and productive relationship,” he said. “Both of our countries have benefited hugely from our growing trade relationship. Without this, we both lose.”
But Mr Frydenberg said as part of any dialogue, Australia’s national interest would be “non-negotiable”.
Australia’s definition of national interest has been a key sticking point for Beijing. China’s Foreign Affairs Ministry on Tuesday evening laid out its most detailed list of grievances since the dispute began in 2018 and accelerated throughout the coronavirus pandemic.
Foreign Affairs spokesman Zhao Lijian explicitly identified for the first time “the root cause” of Australia’s deteriorating relationship with Beijing.
“Australia was the first in banning Chinese company [Huawei] from participating in its 5G network construction, repeatedly prevented Chinese enterprises from investing in Australia under the guise of "national security", and conducted arbitrary searches of Chinese media reporters in Australia,” he said.
“Some people in Australia slandered and accused China of engaging in so-called "intervention and infiltration" activities in Australia.”
Chinese Foreign Ministry spokesman Zhao Lijian.Credit:AP
More recently, he accused Australia of “exploiting platforms” like the Human Rights Council to initiate or participate in joint actions against China on Xinjiang-related issues, high profile “meddling in the national security legislation of Hong Kong” and endorsing Taiwan's attempt to force its way into the World Health Assembly, the decision-making body of the WHO.
Finally, he said “Australia has also engaged in political manipulation on the [coronavirus] pandemic by promoting the so-called "independent international inquiry”.
“The Australian side should reflect on this seriously, rather than shirking the blame and deflecting responsibility.”
The definitive list signals a shift from Beijing as it moves away from more abstract references to Australia “interfering in its internal affairs” which have left the government, business and media to fill in the gaps on how the relationship deteriorated into trade strikes that now threaten $20 billion worth of Australian exports.
Trade Minister Simon Birmingham rejected Mr Zhao’s claim that it was only up to Australia to repair the relationship.
“The ball is very much in China's court to be willing to sit down and have that proper dialogue,” he said on Wednesday.
Dr Lowe said the current tensions should not mean Australia shifts its exports away from China.
“I don’t think it is a matter of diversifying away from China,” he said. “It is a matter of building other markets over time.”
But business leaders have become increasingly anxious about the devolving situation.
BHP chief executive Mike Henry told the forum on Wednesday that Australia was an export dependent economy in a world of rising trade protectionism and escalating tensions with our largest trading partner.
China accounts around 40 per cent of our exports or 8 per cent of GDP, and one in 13 Australian jobs.
“This era is maturing and China’s demand for some of our resources may begin to plateau,” he said.
Mr Henry said the Regional Comprehensive Economic Partnership, a mega-trade deal signed on Sunday by 15 countries including China and Australia, gave cause for optimism.
“Other nations may aspire to succeed in self-sufficiency and autonomy. Australia simply isn’t built to succeed under this model," he said.
"While we are ultimately reliant on countries acting in good faith, we have to ensure we are doing absolutely everything in our power to secure Australia’s continued prosperity through mutually beneficial trade and cooperation.”
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