Xi got his message across, but calls to oppose protectionism are a bit rich

It was only a short meeting – 30 minutes through interpreters, which means barely 15 minutes – but Xi Jinping got his message across when he met Anthony Albanese in Brazil overnight on Tuesday.

Apart from the usual bromides about “mutual respect”, Xi called on Albanese to join forces with China in opposing “protectionism” before Donald Trump takes the White House early next year.

It goes without saying that such calls are a little rich from a country which is only now lifting the last of a series of punitive trade measures against Australia imposed in 2020 over political differences.

But the Chinese are the masters of the narrative game. Xi talks about free trade, while Trump talks even more loudly about protectionism, though in truth the US runs a more open economy than China.

You couldn’t imagine, for example, Xi mimicking one of Trump’s favourite lines by saying “tariff is the most beautiful word in the Chinese language”.

It also goes without saying that China has played this card before – in Trump’s first term, when Xi presented China as a beacon of globalisation and free trade in a speech in Davos in 2017.

Xi’s message had little cut-through then, perhaps because of the elite Swiss Alps venue in which it was delivered. Second time around, however, much of the landscape looks very different.

In the words of Evan Medeiros, an adviser on Asia in the Obama administration: “China failed to take advantage of the global discontent with America during Trump’s first term. It will not make the same mistake again.”

Global south leadership role

China has already led a sharp boost in the membership, scope and clout of the BRICS body. Once made up of Brazil, Russia, India, China and then South Africa, BRICS is growing rapidly, to include three of South-East Asia’s largest nations.

The growth is BRICS has run in parallel with China’s self-proclaimed leadership of the global south, a rubbery term which can apply to any nation which is not a member of the West.

In short, China is changing the existing world order from within while building parallel institutions alongside it. Its diplomatic advances should not be underestimated.

The late Japanese prime minister Shinzo Abe coined the phrase a “free and open Indo-Pacifc” as a kind of guiding philosophy for like-minded nations in the region.

The phrase worked a treat. Not only did Australia adopt it, but so did Washington, which usually likes to establish the branding for a region in which it has long been the most powerful country.

In the absence of leadership in the region today, Xi is doing an end run around Abe’s formulation, proposing this week “an open and interconnected” region, led by China and all but excluding the US.

The word “free” was probably too loaded for Xi and the ruling Communist Party, but you get the message.

So where does all this leave Australia?

Xi is pushing at a half-open door with Australia. China is our biggest trading partner and promises to remain so for years, for all the risks in the iron ore trade.

China and Australia have both continued to support the World Trade Organisation’s dispute-settling mechanism, unlike the US, which has tried to sabotage it. We are also members of at least one regional trade agreement, the Regional Comprehensive Economic Partnership.

Beijing will be using this moment to press Australia to go further on trade, by supporting its efforts to join the bigger regional agreement, the Comprehensive and Progressive Trans-Pacific Partnership.

Canberra won’t shift on that, not least because to do so would be fatal to our relationship with our closest regional partner, Japan. Nonetheless, Trump will help make China’s case.

Australia’s own relationship with the US might end up running on two tracks, with deepening and intensifying ties in security and a more discordant and combative relationship on trade.

Australia has managed such conflicts before: in the early 1990s, when Canberra sided with Tokyo during the US-Japan trade wars; and under Trump 1.0, which was navigated largely successfully by prime ministers Malcolm Turnbull and Scott Morrison.

With US-China conflicts expanding and diversifying, that task is about to get much harder.

Trump’s tariffs ... won’t be the only thing distorting global trade. China’s industrial subsidies and over-production are having an even greater impact.

But for all China’s advantages, life is getting much more complicated for Beijing on the trade front as well.

China’s weak demand at home means its vast industrial output is once again hunting for ever larger export markets.

That is not just causing blowback, along with tariffs and import duties, in the US, Canada and Europe, where the prime target has been Chinese electric vehicles. The same countries that are lining up politically with China in the likes of the BRICS organisation are wilting under a surge of Chinese steel and other goods too.

India, Chile, Turkey and Brazil are among a long list of countries which have imposed duties in Chinese imports or are threatening to. Australian steel makers are also feeling the heat.

Australia will oppose any Trump tariffs and simultaneously hope, once again, to be given exemptions from them by Washington.

But Trump’s tariffs, if they go ahead, won’t be the only thing distorting global trade. China’s industrial subsidies and over production are having an even greater impact.

While we rail against Trump, for good reason, we should make our voice heard on Xi’s “China First” policies as well.