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Sieren's China: A delicate balancing act

Australian Prime Minister Malcolm Turnball is in China with a delegation of 1,000 business people. The country is becoming increasingly important to Australia - compared to the US as well, says DW's Frank Sieren.

Not even Britain, which is considered the most loyal supporter of China among the Europeans, has managed this feat: Australia's prime minister is currently in China with a delegation of over 1,000 business people.

Beijing, Shanghai, Hong Kong and five other cities are all on the itinerary. Despite the fact that there are other foreign dignitaries in China at the moment, including the Nigerian president, Beijing is aware of the honor and has proclaimed this week Australia Week in China (AWIC). There is no doubt about the reason for the Australian prime minister's visit. Australia wants to do more business with China. This worked two years ago when Australia exported $760 million worth of goods to China and attracted investments worth over $2.4 billion.

This time, the strategy seems to be working even better. There is a large chance that the current trip will give rise to even more money. Why? It's very simple: Trade between the two countries has made even more sense since December 20, 2015, when the China-Australia Free Trade Agreement (ChAFTA) came into effect, eliminating various trade barriers, including tarifs on certain goods. The Australian service sector now has freer access to the Chinese market and it will be easier to invest in China. In return, Australia will grant 5,000 work permits and tourist visas to Chinese citizens to support the tourism industry.

Huge significance for exports

China is Australia's biggest export market, with a third of all Australian exports landing there. By comparison, only 6 percent of German goods go to China. China used to be largely interested in raw materials but this has changed. Chinese consumers love the high-quality, clean food that Australia can supply. In view of the many problems the Chinese food industry seems to have to ensure safety, consumers are prepared to pay more for Australian meat, dairy products, or honey.

Frank Sieren Kolumnist Handelsblatt Bestseller Autor China

DW columnist Frank Sieren

According to initial analyses, the free trade agreement between China and Australia seems to already have had an effect. In the first two months of its existence, sales of beef rose by 44 percent compared to the same period the previous year, while wine sales rose by 122 percent. The AWIC will surely boost the figures more. The business delegation is trying to set up new programs in various areas. The minister for trade and investment Steven Ciobo plans to launch a big tourism campaign in Shanghai to draw even more tourists. Without question, Australia would be in a much worse economic state without China, which for its part needs Australia as a supplier. So it is a win-win solution in economic terms. In political terms, however, it's another matter.

Balancing act between economics and politics

This is a paradoxical situation in which China finds itself not only with Australia but with many countries, especially those in its vicinity; for example, Vietnam. It seems to be OK for Beijing, on the one hand, to proclaim an Australia week but then to have to listen to Prime Minister Turnball saying that China's actions in the South China Sea are provocative. The territorial dispute there is the biggest bone of contention in this bilateral relationship. Australia is playing a central role in China's dispute with its neighbors. China has developed a critical stance towards all Australian military aircraft in the region. The fact that Beijing summoned Australia's embassy representatives after the G7 declaration on the territorial dispute cannot be ignored by Prime Minister Turnball. Beijing has called on the G7 not to exaggerate the dispute.

Prime Minister Turnball basically shares the G7 position, however, so it was good for him that Beijing did not employ stronger measures, summoning only the Japanese ambassador in person and allowing other countries to send in their deputies. Nonetheless, it is not easy for the Australian prime minister to strike the right tone during his shopping trip. For the moment, it seems that both sides are content imagining that politics and economics are two parallel worlds. Australia can protest and do business, while China will not draw Australia into its territorial dispute unnecessarily and will make huge investments, while still building artificial islands in the disputed area. Just a week ago, China erected a light-tower in the region. When Turnball returns to Australia he will have to have some convincing arguments up his sleeve for his allies. Japan and the US are not happy about China and Australia's trade arrangement and the timing of this Australia Week in China.

Columnist Frank Sieren has lived in Beijing for over 20 years.

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