What led to the establishment of the AustChina Institute?

The AustChina Institute was founded in December 2024 with the mission to offer unbiased research and top-tier insights on the Australia-China relationship, facilitating more informed foreign and strategic policy-making

Background and Context

Since 2017, the rapidly evolving geopolitical climate has presented significant challenges for Australia in maintaining its strategically balanced position between the superpowers of the U.S. and China. Making the right foreign policy decisions is crucial for Australia's economy, regional security, diplomatic influence, technological advancements and the clean energy transition.

However, to make sound foreign policy and strategic decisions, it is imperative that policymakers have access to unbiased research data and balanced sources of information. Unfortunately, it has been evident for several years that such impartial research has been notably lacking in Australia's think tank landscape:

Several prominent Australian think tanks have been receiving foreign funding, primarily from the U.S., which presents a conflict of interest for work meant to serve Australia's national interest.
Consequently, much of their research seems to have leaned towards a pro-U.S. perspective, while amplifying the 'China-threat' narrative.

It has also been evident that a significant amount of misinformation about China and the 'China-threat' narrative has permeated Australian political discourse and media. Concurrently, Australia has lost many of its China experts due to government funding cuts that spanned several years. The recent 'Independent Review of Commonwealth funding for strategic policy work' conducted by Peter Varghese AO in July 2024 identified that:

"Australia’s falling China expertise is a systemic failure....The more difficult China becomes the more important it is that we understand it. We must have greater depth and multi-disciplinary experts on China to inform the most consequential decisions Government will make on Australia’s security and prosperity in the coming decades."

AustChina Institute at Parliament House — Parliament House, Canberra, Australia. Photo by Travellinglight

Our solution

AustChina Institute (ACI) was formed as a solution to address these critical gaps in Australia's think tank landscape. Key priorities of ACI include:

High-Quality Research and Thought Leadership on Australia-China Relations: To provide policymakers and the public with comprehensive research on China and our relationship with China.
Unbiased and Impartial Research: Unlike several prominent think tanks that receive foreign funding, ACI is funded strictly from within Australia, for Australia!
Career Pathways for China Studies Experts: After initially recruiting China analysts and researchers, we will offer career advancement opportunities for emerging talent on Chinese strategic studies to enhance our sovereign knowledge capabilities on China.

The following will provide more insights into the driving forces behind AustChina Institute's formation:

The rapidly evolving geopolitical climate

Australia's relationships with the two major superpowers, United States and China, have significantly contributed to Australia’s economic, regional security and global standing. Our long-standing alliance with the U.S. is rooted in shared democratic values and strong partnerships, while our relationship with China has been vital for trade, supply chains, tourism and our mutual economic growth.

However, the geopolitical landscape has shifted significantly, presenting numerous challenges in our relationships with both superpowers. This shift is primarily due to the intensifying competition between the U.S. and China. China's rapid economic growth and technological advancements seem to have prompted the U.S. to adopt more hostile actions to contain China.

For several decades prior to 2017, our relationships with the U.S. and China were stable and prosperous. However, since the election of Trump in 2017, Australia's relationships with these two superpowers have changed significantly, arguably for the worse.

What changed in our Australia-US relations since 2017?

Since Trump's election in 2017 (and continuing onto Trump’s second term), the US-Australia relationship has significantly deviated from its traditional form. For example:

The U.S. has shifted from promoting free trade since the post-war era to engaging in trade practices that contravene World Trade Organization policies. For example, the unilateral raising of tariffs against China, which has not only impacted China but also caused significant disruptions to Australian markets and increased our business and trading costs.
Trump's "America First" agenda prioritises America's own interests ahead of its longstanding allies, including Australia. Even America's closest ally, Canada, has been threatened with tariffs and bully tactics. Similar could be expected for Australia.
There is an incompatibility in climate change ambitions. While Australia is committed to the Paris Agreement and is on track to meet its targets by 2030, Trump has withdrawn the U.S. from the Paris Agreement altogether—an action which Australia and our Indo-Pacific neighbours will not condone.
The state of American democracy and the values it upholds have significantly changed. For example, the January 6th U.S. Capitol attacks, a convicted felon being elected as the next president and a lack of trust in the main institutions of the country (e.g. the judicial system, FBI, CDC, NIH, the media, and scientific institutions)…etc. This has created instability and uncertainty in the Australia-US relationship.

Trump's policies have caused friction and differing priorities in the Australia-US relationship, which will continue to pose challenges during his second term.

What changed in our Australia-China relations since 2017?

Leading up to 2017, trade and partnerships were booming between Australia and China. According to a poll conducted by the Lowy Institute in 2016, China was Australia's "Best friend in Asia" and around 80% of Australians were overwhelmingly positive about their views towards China.

However, since 2017, our relationship with China has shifted significantly away from the familiar partnership built on mutual respect and collaboration. By the end of 2017, Australia's relationship with China had drastically soured:

Several allegations of Chinese foreign interference in Australia started in 2017
Claims of China’s bully tactics and "wolf warrior diplomacy" against Australia emerged from 2020
China raised tariffs and imposed economic sanctions against Australia starting in 2020
China's foreign investments into Australia reduced by 90% over the next 5 years

The current Labor government have managed to significantly improve this relationship, but underlying tensions between Australia and China still persist.

What caused these drastic changes to our foreign relations in 2017?

The common factor appears to be a significant shift in U.S. strategy since Trump's inauguration in early 2017, particularly his aggressive foreign policies aimed at containing or hindering China's progress. Throughout his election campaign, Trump consistently used hostile rhetoric against China. And since 2017, Trump has resorted to confrontational means of competing with China, which includes disregarding WTO regulations and its rules-based order for fair competition. He has also urged Australia and its allies to limit their engagement with China due to concerns about China's rising power and influence.

Given this backdrop of 'encircling' China, it's evident that Beijing has been provoked by Trump, leading to China's reaction through foreign interference, 'wolf warrior diplomacy', cyber-espionage and retaliatory tariffs against US and Australia. While these actions by China are not excusable, they provide context for the drastic change in our previously respectful and collaborative relationship with China.

The "China-threat" narrative

Most Australian media outlets depicted China as reacting aggressively, often omitting the context that led to such actions. This unbalanced coverage seemed to suggest that China was the instigator of hostility. However, evidence indicates that Trump's hardline rhetoric and equally aggressive foreign policy against China might have been the primary catalyst in driving China into this defensive posture, in both U.S. and Australia.

Instead of being perceived as a defensive reaction, it ultimately gave more credibility to the 'China-threat' narrative which was frequently referred to by the Trump administration. Although efforts by the current Labor government and Beijing have led to improved relations, concerns of 'China-threat' continue to persist within our political discourse and across social media.

China's ongoing territorial disputes and assertiveness in the South China Sea have not helped its cause. An international tribunal has rightly condemned China for persisting with its assertive behaviour in the region. While these actions are inexcusable, it is important to maintain a balanced perspective of the issue. For example:

Given over 64% of China’s maritime trade already passes through the South China Sea, it is clear that China has an established strategic interest in protecting it.
Although China’s military installations around the Spratly Islands in the South China Sea are a concern to the region, they are also expected given China’s interest in protecting these vital trade routes. Similarly, the U.S. has built a vast network of naval bases and military posts to protect its major trade routes around the globe.

It is important to recognise that China's assertiveness has primarily been confined to its immediate region, such as the South China Sea and along China's borders. Although China has been modernising and expanding its military capacity, its primary focus has been on its regional defence and protecting its interests. In terms of global reach, China has 2 overseas military bases, whereas the U.S. has over 750 military bases worldwide. This contrast highlights that while the U.S. pursues a strategy of global power projection, China's military strategy is largely centered on safeguarding its regional security interests. This once again challenges the China-threat narrative.

Beijing's Yongding Tower and China World Trade Center CBD

What is the outlook on the Australia-US relationship under Trump 2.0?

Trump's appointment of China hawks to his cabinet signals escalating hostilities towards Beijing. Additionally, Trump has threatened to impose a 60% tariff and other economic coercive measures against China.

How will Trump's policies impact Australia? What will it cost Australia?

Given that China is our largest trading partner, any slowdown in the Chinese economy could put $150 billion worth of trade between Australia and China at risk. This could potentially lead to multiple recessions here in Australia.
Australia's exports to the U.S. are expected to be hit with 10% to 25% tariffs, which will lead to reduced trade volumes and revenue for Australian businesses.
Due to our close military ties with the U.S., Australia would likely be drawn into any future conflict or war between the U.S. and China. In such a scenario, Australia could be the biggest casualty, as we would be at the geographical frontline and our alliance with the U.S. would make us a significant target.

It is important to note that “Trumpism” will most likely continue even after Trump’s second term, as:

Future Republican candidates will most likely adopt Trump’s policies so they can appeal to the large support base that Trump has already cultivated.
The staggered election cycles in the U.S. Senate and House could contribute to continuity of Trump's policies.

This new form of Australia-US relations could pose a persistent challenge for Australia for at least the next eight years, beyond Trump's second term.

The United States Capitol building, Washington DC

What is in our national interest?

Over the last couple of decades, Australia’s economic success has been closely tied to China’s economic success. For instance, our trading partnerships with China during the Global Financial Crisis of 2008 enabled Australia to navigate through the biggest financial crisis since the Great Depression with barely a scratch, while most other advanced economies suffered severe recessions.

Conversely, a slowdown in the Chinese economy could potentially lead to recessions in Australia. Hence, it is crucial that Australian politicians and decision-makers recognise that any further contribution from Australia towards America's ambition of dominating China will not align with our long-term national interest.

It's important to note that the alliance between the U.S. and Australia and its treaties such as the ANZUS and AUKUS:
• Does not prohibit Australia from working towards our own national interest
• Does not mandate us to contribute towards U.S. rivalry against China
• Does not override our independence in choosing which of our regional partners that we chose to collaborate with to advance our economy

In fact, Australia's efforts to advance our national interests and our economy will enable us to be a more robust ally to the U.S. For example, a stronger economy will allow Australia to invest more in its defence, thereby enhancing its deterrence in the region. Additionally, it will bolster our diplomatic influence in the region. Both are ideals sought by the Australia and U.S. alliance.

Considering the likely economic downturn in Australia under a second Trump administration and beyond, we examine potential strategies to mitigate these losses, including the leveraging of new opportunities that may arise between Australia and China.

Celebrating Australia Day, 2017 in Cronulla. Photo by Daria Nipot

Synergies we have with China

It is well known that the economies of Australia and China are highly complementary. While we already have well-established trading in mining, agriculture & renewable technology sectors, further opportunity to collaborate would arise in the following sectors in which China has already emerged as a global leader and would have synergies with Australia:

EVs and the clean-energy transition
Artificial intelligence
Biopharmaceutical innovation
Robotics
Quantum technologies…etc

To get an objective, high-level view of the synergies that we have with China and its potential, it is helpful to examine the degrees of influence we have with China and compare it with that of U.S.:

Beijing's famous landmark towers, Wangjing SOHO. Photo by Bingdian

Degrees of Influence

Influence On Australia	China	United States
Trading	China is Australia's biggest trading partner with $230B worth of two-way trade a year. Over 41% of all our exports are with China.	The current Australia-USA trading market is 1/5th that of Australia-China at $46B of trade a year. About 4.3% of all our exports are with U.S. This could further reduce if Trump is to raise tariffs in 2025
Foreign Investments	China (including Hong Kong) invests about $234B in Australia, which is about 5% of all foreign investments in Australia. There has been a 90% drop in Chinese investments since 2017, primarily due to our alignment with U.S. and restrictions that we have imposed	U.S. invests $1.17T, which is about 25% of all foreign investments in Australia and 5 times as much as China. However, these investments are likely to significantly decline soon due to Trump's protectionist policies and the resulting economic unpredictability.
Military Partnerships	Australia and China conducted joint military drills starting in 2010, but these ceased in 2020 due to diplomatic tensions between the two countries	Australia has a strong military alliance with the United States through the ANZUS Treaty and the AUKUS partnership. However, the AUKUS partnership could potentially draw Australia into conflicts that align more with US interests rather than Australia's.
Climate change targets	Compatible to that of Australia. Both are committed to the Paris Agreement and intend to accelerate their investment into the clean energy transition to meet their climate action goals	Not-compatible (given Trump will be withdrawing US from the Paris Agreement). Instead of progressing on the clean-energy transition, US has chosen to invest more in fossil fuels and roll back environmental regulations
Renewable & EV technologies	China has already become the leader in the renewable and EV industry. Their competitively priced products have enabled Australia to make significant progress in its Australia's National Electric Vehicle Strategy and Renewable Energy Target (RET) scheme	Given the expected Trump 2.0's rollback of clean-energy initiatives, US will most likely lose its competitiveness and global standing on renewable and EV technologies
Other critical technologies	China is now leading 90% of critical tech research. This includes AI, robotics, quantum computing, biotechnology, space exploration...etc. China is also leading in the number of citations of their research papers, indicating a high degree of quality of their research publications	Though U.S. led in most of these critical technologies in early 2000s, it is no longer the case. While U.S. retains leadership in 10% of critical tech research, this is expected to further decline due to Trump's funding cuts to National Science Foundation (NSF), National Aeronautics and Space Agency (NASA), National Institutes of Health (NIH)...etc
Tourism	China is the largest source of tourists to Australia with $12b spent by those tourists each year	United States rank 3rd among the number of tourists that visit us with $4b spent by those tourists each year
Cultural	More than 1.39m of the Australian population have Chinese heritage (according to a 2021 Census). And Mandarin is the second most spoken language in Australia after English. The Chinese community has made an immense contribution to the Australian society, culture and economy.	At the end of 2023, there were 114k USA-born people that are living in Australia. Given the low numbers, their influence on the Australian culture is not as significant
Regional	Given China is significantly closer to Australia, there are lot of shared regional interest & cultural ties between Australia and China	Due to the tyranny of distance, there are far fewer regional influences that are shared between US and Australia
Science-lead policy	China's policy-making involves significant research, public debate and scientific rigor. Investments around technology clearly shows predictability due to their on science-backed policies. This results in more stable foreign investment opportunities between Australia and China.	Policy-making in US is heavily influenced by prominent lobby groups (eg fossil fuel lobbies, gun lobbies...etc), large corporations and wealthy individuals. Independent science research is often overshadowed. Under Trump 2.0, this is expected to worsen with several unqualified appointees being nominated for key positions in the cabinet. The outlook on Australia’s foreign investments in US could become unpredictable.

The above indicates that Australia has established strong partnerships with the U.S. through foreign investments and security alliances, while maintaining equally strong trade relationships with China. It also suggests that:

There are clear signs emerging of the decline of U.S. global leadership, its stability and economic influence
Conversely, given China has a higher degree of influence and synergies with Australia, there is significantly more potential for growth across those compatible industries.

In Summary

Leading upto 2017, China was Australia's "Best friend in Asia" with thriving trade relations.
However, since 2017, hostile rhetoric and aggressive foreign policies by President Trump against China have prompted defensive actions by China, including foreign interference and cyber-espionage towards both the U.S. and Australia. This has led to significant degradation of the Australia-China relationship.
The incoming Labor party have successfully stabilised the relationship in 2022. However, given China is our main regional trading partner and the rising potential for future growth through increased collaboration, both nations have an interest in moving beyond stabilisation.
It is imperative that we look at China and our relationship with China without the past bias we may have had, while dismantling the China-threat narrative. This requires access to unbiased and objective research on China - which has been lacking in Australia's think tank landscape.
The AustChina Institute was established to bridge this gap in Australia's think tank landscape, providing policymakers, businesses and the public with comprehensive analysis and research on the Australia-China relationship. This unbiased research will be crucial for shaping our future foreign and strategic policy decisions, driving Australia's economic prosperity, diplomatic influence and regional security.

For more information about our mission and our objectives: About Us