Former ambassador: Australia–China ties settle into tenuous “new normal”

Australia and China have emerged from one of the lowest points in their bilateral relationship, but the resulting stabilisation is neither a reset nor a return to business as usual, according to a new Lowy Institute Analysis.

The paper by former Australian ambassador to China Graham Fletcher, entitled Australia and China: Embracing while sparring, argues that Beijing and Canberra have settled into a pragmatic relationship based on mutual self-interest. But it remains vulnerable to geopolitical shocks, strategic competition, and deep differences in values and worldviews.

The Analysis traces the breakdown in relations from 2017, China’s subsequent campaign of economic and diplomatic pressure, and the stabilisation process that began after the election of the Albanese government in 2022.

Fletcher says that while both countries have restored essential communication channels and resumed trade, scope for further expansion is limited.

He says Australia is more vigilant about its economic resilience and less enthusiastic about deeper engagement with Beijing. Meanwhile, China has not given up on hopes of drawing Australia closer into its orbit.

Fletcher concludes that current arrangements are more realistic, and likely “good enough” for Canberra, allowing Australia to maintain a functioning relationship with its largest trading partner while protecting its sovereignty and national interests.

“Mutual self-interest is sufficiently strong to anchor a long-term partnership,” writes Fletcher. “Yet the conflicting strategic interests and values will prevent genuine closeness.”

“The relationship remains liable to disruption, poised in an international context that could pull or push in unexpected directions.”

“Stability will remain a goal, not a given.”

KEY FINDINGS

• The Australia–China relationship is now on a more realistic footing, having emerged from a significant downturn that began in 2017.
  
• For Canberra, this modest and pragmatic new normal should enable current settings for a workable relationship to continue, although Beijing is willing to do more and go further.
  
• Yet the foundation of mutual self-interest remains fragile, vulnerable to the two countries’ diverging worldviews and objectives, and to future geopolitical events, not least a sharper US–China rivalry.

ABOUT THE AUTHOR

Graham Fletcher is a Nonresident Fellow at the Lowy Institute and a former Australian diplomat. He was posted to Beijing three times, then to Washington, and later served as ambassador to China from 2019 to 2023. His final government role was Deputy Secretary (International and Security) in the Department of the Prime Minister and Cabinet. He is now affiliated with UNSW Canberra.

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