Australian Treasurer Jim Chalmers has made headlines during his recent visit to Beijing, where he welcomed China’s efforts to stimulate its slowing economy. This visit marks a significant moment in Australian-Chinese relations, especially considering it’s the first by an Australian treasurer in seven years. Chalmers’ message is clear: Australia’s economic well-being is closely tied to China’s recovery.

The Impact of China’s Economic Slowdown

During his two-day visit, Chalmers pointed out that China’s economic struggles are affecting Australia. He mentioned several factors contributing to Australia’s slowing economy:

• Global Economic Uncertainty: Unpredictable global markets have left many countries, including Australia, vulnerable.
• High Interest Rates: Elevated interest rates are weighing heavily on economic activity.
• China’s Slowdown: With Chinese growth forecasted to stay below 5% for the next three years, this is the weakest expansion since the late 1970s.

Chalmers noted, “When steps are taken here to boost economic activity and to boost growth in the Chinese economy… we see that as a very, very good development for Australia.”

Reviving Bilateral Relations

The backdrop of Chalmers’ visit is a thawing in bilateral relations that have been tense for years. The Australia-China Strategic Economic Dialogue was revitalised during his meetings, aimed at increasing trade and investment opportunities.

In the past, Australia faced significant trade barriers imposed by China, costing exporters more than AU$20 billion annually. However, Chalmers indicated that these “trade impediments” now cost less than AU$1 billion per year.

Key Discussions in Beijing

Chalmers’ agenda included several critical issues, such as:

• Restrictions on Australian Exports: He raised concerns over the ongoing Chinese restrictions on imports of Australian lobsters and red meat from two processors.
• Investment Rules: Chalmers reassured Chinese officials that Australia’s foreign investment regulations are non-discriminatory and do not target China specifically.

Economic Ties and Future Prospects

China remains Australia’s largest trading partner, primarily through imports of iron ore and coal. Last year, two-way trade reached a record AU$327 billion, more than double the value when a free trade agreement was signed in 2015.

Chalmers emphasised, “Our resilience and prosperity are closely connected to China’s economy.” This statement encapsulates the symbiotic nature of their relationship, especially in the current climate of economic uncertainty.

Recent Economic Measures by China

In a bid to revive its economy, China recently announced a series of measures, including:

• Lowering Bank Reserve Requirements: This reduction aims to encourage lending and stimulate growth.
• Interest Rate Cuts: The central bank has also reduced interest rates on loans to commercial banks.
• Investment in State-Owned Banks: Reports suggest the Chinese government plans to allocate 1 trillion yuan (approximately $142 billion) to recapitalise major state-owned banks.

These measures are vital for both China’s economy and its trading partners like Australia.

Security Concerns in the Asia-Pacific Region

While the focus of Chalmers’ discussions was primarily on economic issues, security concerns cannot be overlooked. He addressed China’s military activities, including:

• Naval Operations Near Japan: Chalmers raised concerns about a Chinese aircraft carrier accompanied by destroyers entering waters near Japan.
• Ballistic Missile Tests: The recent test-firing of an intercontinental ballistic missile into the Pacific Ocean also drew international scrutiny.

Chalmers asserted the importance of “safe and professional conduct of all militaries operating in our region,” highlighting the delicate balance between economic cooperation and regional security.

Conclusion: A Path Forward for Australia and China

Jim Chalmers’ visit to Beijing reflects a cautious optimism for the future of Australia-China relations. The discussions around stimulating economic growth and addressing trade barriers signal a potential revitalisation of ties that could benefit both nations.

As China implements measures to boost its economy, Australia stands to gain significantly, given their interconnectedness in trade. The road ahead may be complex, but the opportunities for collaboration are abundant.