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Resource Cooperation Relations
In 2024, Australia remains the world’s largest exporter of iron ore, with approximately 720 million tons of iron ore exported to China, accounting for 71% of its total exports. With the growth of global steel production, iron ore prices rose again in the first half of 2024, reaching $170 per ton. Although it did not reach the highs of 2021, it remains at a historically high level.
In terms of coal resources, Australia’s coal exports to China in 2024 have returned to pre-pandemic levels, reaching 115 million tons, but still face significant market uncertainties. Due to the lingering impact of the 2020 export restrictions, China in 2024 increased its coal imports from other countries, particularly Indonesia and Russia. In 2024, China’s coal imports from Indonesia and Russia increased by 35% and 20%, respectively. This adjustment led to a roughly 10% reduction in Australia’s share of the Chinese coal market.
Australian mining giants BHP, Rio Tinto, and FMG continue to hold significant positions in the Chinese market. In 2024, BHP’s revenue from the Chinese market accounted for 38% of its total revenue. Due to the uncertainty in China-Australia relations, these companies are striving to achieve market diversification. BHP’s CEO Mike Henry stated at the beginning of 2024 in the company’s performance release, “Although the Chinese market is crucial to our business, we are accelerating the expansion into Indian and Southeast Asian markets to reduce dependence on a single market.“
China has not yet taken explicit countermeasures, but market sentiment has already been affected. According to data from June 2024, bilateral trade between China and Australia decreased by 12% compared to the same period last year, with trade in mineral products down by 15%, while trade with other countries and China has steadily increased. In the first half of 2024, China’s iron ore imports from Brazil increased by 8%, while coal imports from South Africa rose by 14%. The transportation cost of iron ore from Brazil to China is 25% higher than from Australia, and the shipping cycle is about 50 days, 15 days longer than from Australia.
Diplomatic Warmth and Chill
At the beginning of the year, the Australian government introduced a series of new policies that strictly scrutinized Chinese companies’ investments and technological cooperation in Australia, quickly leading to a cooling of diplomatic relations between the two countries. In the first half of 2024, the frequency of diplomatic interactions between China and Australia decreased by 35%, and the number of high-level bilateral meetings dropped from 12 last year to 8. In May 2024, the Chinese government imposed higher tariffs on some Australian agricultural exports, particularly key products such as wine, barley, and beef. According to data from the Australian Trade Department, this move led to a 25% decline in Australia’s agricultural exports to China between May and July, with wine exports down 32%, and barley and beef decreasing by 28% and 24%, respectively.
In June 2024, at the United Nations General Assembly, both sides engaged in heated debates over climate change and human rights issues. The Australian government criticized China’s human rights record, while China retaliated by pointing out Australia’s shortcomings in protecting the rights of Indigenous peoples. In August, the Chinese government announced a suspension of some high-level diplomatic dialogues with Australia, a move widely interpreted as a direct response to the Australian government’s hardline stance. Sources within diplomatic circles indicate that although day-to-day diplomatic communication between the two countries continues, high-level meetings on major strategic issues have basically come to a standstill. In the first half of 2024, the number of Chinese tourists traveling to Australia increased by 18%, and Australian educational institutions also saw a 22% increase in Chinese student enrollments.
Regional Security Discrepancies
On the South China Sea issue, China insists on its sovereignty claims and continues to advance island-building and military deployments. Australia, aligning with its main ally, the United States, opposes China’s expansion in the South China Sea, frequently participating in joint military exercises and dispatching warships through the South China Sea to demonstrate its support for “freedom of navigation.” According to public data, in the first half of 2024, the Australian Navy, along with the United States, Japan, and other countries, conducted 5 joint military exercises in the South China Sea, an increase of 25% compared to the previous year.
In terms of the Indo-Pacific strategy, Australia actively participates in the U.S.-led “Quad” mechanism, strengthening security cooperation with the United States, Japan, and India. In March 2024, the four countries conducted a large-scale military exercise named “Shield 2024” in the northern waters of Australia, involving over 12,000 personnel and dozens of warships and fighter jets. In 2024, Australia announced that it would provide a total of $2 billion in military aid to the Philippines, Vietnam, and Indonesia, including advanced radar systems, patrol vessels, and military training support.
According to an international relations research report published in May 2024, the frequency of military exchanges and high-level defense dialogues between China and Australia decreased by 40% over the past year, reflecting deep contradictions between the two sides in the field of security. China believes that Australia’s security policies are aligned with the U.S. strategy to contain China’s rise, while Australia insists that its actions are aimed at maintaining regional stability and its own security. Although there are numerous differences between China and Australia on security issues, some analysts point out that the two countries still have room for cooperation in combating terrorism, responding to natural disasters, and addressing regional non-traditional security threats.
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