Why stronger Australia-China bilateral ties are in our best interests

If the current narrative in Chinese media is anything to go by, there is growing angst concerning Australia’s diplomatic language towards China and why confrontation and suspicion rather than cooperation seems to have intensified.

China is lauded as Australia’s key trade relationship and the country’s economic stability is heavily tied to it. It was once thought that when the United States sneezed, Australia would catch a cold. Now it seems that a sneezing China would have Australia contracting pneumonia.

Recent criticism of Australian foreign policy towards China in mainstream Chinese media highlights a growing chorus seeking redress. This is coupled with recent official Chinese government pronouncements warning Chinese nationals in Australia to be vigilant with their personal safety.

Many reliant on productive bilateral relations are concerned, especially the tourism industry; China is Australia’s largest source of inbound tourists.

One of the enduring mainstream criticisms regarding Chinese interventions is that the growth of Chinese investment in residential real estate is largely responsible for Australia’s housing affordability crisis. While this is true in a very limited number of locales, overall, such sentiments are misguided.

What is the Australia-China relationship worth?

Australia’s terms of trade with China emphasises that China remains the country’s preeminent trade partner. At the end of 2016, Australian exports to China were valued at around $60 billion – next was Japan at $26.34 billion. In terms of imports, Australian imports from China were valued at $44 billion, more than double the United States at $21 billion.

At the end of 2016, Chinese investment in Australia (inclusive of Hong Kong) was valued at $196 billion. This is considerably smaller than that from the US ($877 billion), United Kingdom ($477 billion), Belgium ($270 billion) and Japan ($213 billion). However, a discernible shift is occurring, underlined by a growing Asian investment, especially from China; from 2015-2016 Chinese ODI increased from $13.75 billion to $15.36 billion.

Tourism is a major plank in Australia’s cultural and trade relationship with China.

When it comes to Chinese inbound tourism to Australia, from July 2016 to June 2017 more than 1.3 million Chinese visitors spent nearly $10 billion. This is expected to rise; Chinese visitation to Australia is forecast to be 1.6 million in 2018-2019.

Chinese inbound tourism as a barometer for Australia-China relations

Australia was one of the first to have achieved Approved Destination Status (ADS) in 1999. The conferral of ADS meant that Chinese travellers were encouraged to visit Australia and were given preferential treatment insofar as entry visas were concerned.

Chinese inbound tourism is arguably a barometer of the Chinese economy and of Chinese attitudes, with Australia ranked as one of the most desired destinations. While Australia has mostly enjoyed broad Chinese admiration and goodwill, this is under some strain as Australia’s foreign policy position has become increasingly confrontational and inquisitorial.

The links between Chinese foreign policy and Chinese outbound tourism are strong, as evidenced during recent tensions in the China-South Korea bilateral relationship. Chinese inbound tourist arrivals to South Korea plummeted rapidly as bilateral relations soured. The Australian tourism industry is aware of the risks should it be made subject to a similar fate.

As more mainland China airlines are looking to develop direct connections to Australia, compromised bilateral relations would be disastrous for the sector.

At the Austrade China Tourism Mission in October 2017, Australia’s Consulate General in Chengdu, Christopher Lim, highlighted the importance of the Australia-China bilateral tourism relationship, citing that tourism is a major plank in Australia’s cultural and trade relationship with China.

2017 coincided with the China-Australia Year of Tourism (CAYOT), where Australia maintained top billing throughout China as destination of the year. Indeed, links between Chinese inbound tourism, Chinese international students and Chinese investment in Australia are strong and leverage the appeal of "brand Australia". Undermining one can have serious ramifications elsewhere.

Is there a mismatch between what we think China is like and how far it has come?

This highlights that good relations with China is in Australia’s interest, perhaps more so than it is in China’s. Australia isn’t the only country that has China as its major trading partner, and complacency can be ill-afforded.

It reinforces that Australian foreign policy towards China must be geared more sensitively toward maintaining goodwill, cooperation and understanding.

Contemporary China is worlds apart from the China of the early 2000s, and even working backwards to the 1990s and 1980s. There is puzzlement about Australia-China bilateral relations where sabre-rattling has become all too common. While the diplomatic discourse may vary from that in the popular media, there's no mistaking the tone.

The extent to which this filters down to the societal level remains unclear, but that this is a harbinger for popular sentiment deserves serious consideration. Indeed, that Chinese buyers are considered responsible for the rising house prices in Australia's cities has been widely made, and despite evidence to the contrary, this narrative endures.

This aligns with our research in regional Australia, where although townships are cognisant of the economic advantages of Chinese visitation, they've become more critical and unwelcoming as numbers rapidly rise. But, of course, 50 Chinese tourists in town will always appear so much more conspicuous than the equivalent number from the US, UK or New Zealand.

The potential for Chinese inbound tourism is undoubted. However, whether Australia is seen as a congenial host or rowdy and unpredictable "mate" must be handled with care and sensitivity. We cannot afford to be complacent.

Dr Joseph M. Cheer was the recipient of a grant through the Australia-China Council and the Australian government in 2017-2018. With this, Monash University is hosting the symposium Beyond the City: Dispersing Chinese Visitors into Regional Australia on 12 February, 2018. The aim is to investigate how Chinese inbound tourism can make a larger contribution to sustainable and resilient economic development in regional Australia.