Since coming to office in 2022, the Australian Labor Party government of Prime Minister Anthony Albanese has championed the virtues of a “stabilized” relationship with President Xi Jinping’s China. The fruits of this approach—which dropped a mantra of “pushing back” against Beijing and instead deployed the careful rhetoric of “constructive” engagement—have been obvious. Under the previous, conservative government of Scott Morrison, China’s unreasonable economic coercion of Australia had resulted in punitive sanctions on Australian exports to China of wine, barley, lobster, and coal, among other products. In December 2024, this came to an end when China lifted its final Australian embargo, on lobsters.

Yet through this period of high diplomatic tension, the two countries’ economic complementarity continued, especially in the resources sector. Australia’s iron ore trade with China has largely underwritten its national prosperity for the past three decades, and neither Beijing nor Canberra’s hawks dared use it as leverage.

Since coming to office in 2022, the Australian Labor Party government of Prime Minister Anthony Albanese has championed the virtues of a “stabilized” relationship with President Xi Jinping’s China. The fruits of this approach—which dropped a mantra of “pushing back” against Beijing and instead deployed the careful rhetoric of “constructive” engagement—have been obvious. Under the previous, conservative government of Scott Morrison, China’s unreasonable economic coercion of Australia had resulted in punitive sanctions on Australian exports to China of wine, barley, lobster, and coal, among other products. In December 2024, this came to an end when China lifted its final Australian embargo, on lobsters.

Yet through this period of high diplomatic tension, the two countries’ economic complementarity continued, especially in the resources sector. Australia’s iron ore trade with China has largely underwritten its national prosperity for the past three decades, and neither Beijing nor Canberra’s hawks dared use it as leverage.

Indeed, despite the many targeted sanctions on Australia’s goods over that period, Canberra’s overall exports to China nearly doubled, from $116 billion in 2017 to $218 billion in 2023. With business booming, Labor took the off-ramp after its first election win in 12 years, and dialogue with Beijing was restored. So, too, were annual reciprocal leaders’ visits, which had been suspended since 2017.

Now well into its second term in office, the Albanese government had until recently remained extraordinarily disciplined in sticking to the stabilization mantra. Neither the circumnavigation of the country by a small fleet of Chinese naval vessels last year nor the decision by the Chinese to practice live-fire exercises without warning in the Tasman Sea between Australia and New Zealand could dislodge it.

“Stability” had understandable appeal in a world convulsed anew by great-power rivalry: Even Xi and U.S. President Donald Trump invoked the notion........

© Foreign Policy