Australia and China: VCE Politics Unit 4

What this dot point is asking

China is the other common choice for the second state, because it combines Australia's biggest economic relationship with its sharpest security concerns. You must assess how Australia's pursuit of its interests has led to cooperation and conflict.

The answer

Interests

• Economic prosperity. China is by far Australia's largest trading partner. Two-way trade is on the order of A$300 billion a year (as at the most recent full year; check the latest DFAT figures), far larger than with any other partner.
• Security. Australia is concerned about China's military build-up, activity in the South China Sea and efforts to increase influence in the Pacific.
• Regional relationships and standing. Australia wants a stable region where disputes are managed under international law, while maintaining its alliance with the United States.

Conflict and tension

• Trade restrictions (2020 to 2023). From 2020 China imposed restrictions on Australian exports such as barley, wine and coal. This followed Australia's call for an independent inquiry into the origins of COVID-19 and its tighter foreign interference and investment rules. China described the measures as trade-remedy or quarantine decisions, while Australia and other governments described them as economic coercion. The restrictions were gradually lifted by around 2024.
• AUKUS. China criticised the 2021 partnership as destabilising.
• Port of Darwin. The 99 year lease to the Chinese-owned Landbridge Group, signed in 2015, became a security issue, and the Albanese government has said the port should return to Australian ownership. Landbridge has disputed the process, with reports in 2026 of international arbitration against the Australian government, while negotiations over a sale continued (these are fast-moving reports, so check for later developments).
• Military incidents. In February and March 2025 a Chinese naval task group circumnavigated Australia and conducted live-fire exercises that forced airlines to alter routes. Australia criticised the lack of notice.

Cooperation and stabilisation

After the change of Australian government in 2022, leaders resumed regular meetings and trade restrictions eased. Prime Minister Albanese visited China in July 2025 and announced a review of the China-Australia Free Trade Agreement, a tourism agreement and a new policy dialogue on steel decarbonisation. This shows a managed approach: cooperate on trade, disagree on security, and keep channels open.

Judging the relationship

The evidence supports "managed competition": strong trade interdependence encourages stability, while strategic differences remain and could re-emerge. A verdict could be: "cooperation has been restored in trade but conflict persists in security, so the relationship is stable but fragile".

Worked example

Question. Discuss one challenge in Australia's relationship with China.

Model answer. A key challenge is the 2025 circumnavigation by a Chinese naval task group, which conducted live-fire drills in international waters between Australia and New Zealand and caused airlines to divert. Australia's government objected to the lack of prior notice and raised the matter with Chinese leaders, but also stressed that the exercise was in international waters. The incident shows how China's regional military activity complicates trust even while trade ties continue.

Try this

Q1

Why is China important to Australia's economic interests? Model answer: It is Australia's largest trading partner, buying large volumes of iron ore and other exports.

Q2

Explain one reason for conflict between the two states. Model answer: Australia's security concerns about China's military activity and influence in the Pacific, such as the 2025 naval task group.

Q3

What does "managed competition" mean? Model answer: Each state accepts it will compete over some issues but keeps channels open and protects trade to prevent escalation.