While the Trump administration doubles down on its ‘America First’ approach to reshaping global power dynamics, key allies like Australia are quietly charting their own course - rebalancing relations with China in ways that may diverge from Washington’s long-term strategy in the Indo-Pacific.

Australia’s message to China

Australia’s Prime Minister Anthony Albances was supposed to meet Donald Trump on the sidelines of G7 summit in Canada. The meeting did not take place, as Trump left the summit in the middle of Iran-Israel war. While such diplomatic snubs would normally raise eyebrows, Canberra seemed unperturbed. Instead, Albanese’s subsequent high-profile visit to Beijing sent a clear message: for Australia, economic pragmatism continues to trump imperatives of ideological or geopolitical alignment. With trade relations with China showing signs of recovery after years of friction, the visit underscored Australia’s effort to navigate a delicate path between its largest trading partner and its key strategic ally.

This calibrated diplomacy comes at a time of renewed uncertainty surrounding the AUKUS pact - a trilateral security agreement between Australia, the US, and the UK aimed at equipping Australia with nuclear-powered submarines to bolster its naval presence in the Indo-Pacific to check Chinese advances. The deal, worth tens of billions of dollars, is currently under review by the Trump administration in Washington. This review includes calls for Australia by the Trump administration to increase its defense spending and overall contributions to the pact, further highlighting Canberra’s growing dependence on the whims of US domestic politics.

This visit comes against the backdrop of the fact that AUKUS, while it offers an unprecedented opportunity to Australia to acquire modern systems, also exposes a deeper vulnerability: Australia’s limited ability to shape the strategic direction of its own neighbourhood, caught as it is between economic ties with China and defense commitments to an America that may no longer see alliances as sacrosanct. In this shifting landscape, Australia’s challenge is not just about balancing Beijing and Washington. It’s about asserting agency in an Indo-Pacific increasingly shaped by volatility, mistrust, and great-power rivalry. This assertion has once led it to redefine its ties with China.

Australia’s recalibration is not taking place in a vacuum. There is considerable domestic political support for this policy. Despite how Washington portrays China as a ‘threat’, within Australia, only a minority considers China to be a threat. A majority of the Australians see ties with China as a complex configuration that nonetheless should - and can be - managed because it is ultimately beneficial. Even within China, this publicly backed support for better ties with China and Canberra’s efforts to mutually balance ties between the US and China is clearly well received and understood.

China’s state newspaper Global Times says Albanese’s visit “carries special significance” and shows “Australia’s desire to seek more reliable partners in an uncertain world order… with China being the obvious choice”. There is little denying this. China is Australia’s largest trading partner, and Albanese’ visit is about furthering these ties. As reports indicate, Albanese is accompanied by a business delegation to the cities of Shanghai, Beijing and Chengdu for his six-day trip. His official itinerary included meetings with groups involved in business, tourism and sports.

From AUKUS to new forms of bilateral and multilateral trade

In this context, therefore, many observers view the Australian Prime Minister’s recent visit to China as a strategic step toward reinvigorating economic ties and potentially paving the way for China’s entry into the 11-member Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Australia, which currently chairs the CPTPP, plays a central role in shaping the pact’s direction. The CPTPP evolved from the original Trans-Pacific Partnership (TPP) after the United States withdrew in 2017 under President Trump. China formally applied for CPTPP membership in 2021 and continues to lobby for inclusion.

Beijing is increasingly framing its engagement with Canberra within the broader context of a new multilateralism represented by the CPTPP - one that spans beyond the Indo-Pacific to include countries like Canada and the United Kingdom. Underscoring its commitment to deepening trade ties in all possible ways, the Chinese ambassador to Australia has published op-eds in major Australian newspapers emphasizing Beijing’s willingness to deepen bilateral economic partnership, even highlighting emerging sectors such as artificial intelligence as potential areas of collaboration.

The core message from Chinese officials has been consistent: China does not view Australia as an adversary, and there is ample room for peaceful coexistence and mutual benefit. With no direct territorial disputes or major political conflicts between the two nations, this message has found a receptive audience in parts of the Australian political landscape. Labor senator Raff Ciccone, who chairs the Australian Parliament’s security committee in Australia, recently stated that economic engagement with China can play a stabilizing role.

“When there’s trade, when there’s dialogue, when there’s economic interests at play,” he said, “countries are less likely to engage in the worst-case scenario, which is war.” In other words, Australia, too, does not necessarily view China as a foe. Albanese’ visit may thus not only reset diplomatic relations but also signal Australia’s openness to a broader regional vision where economic pragmatism and strategic dialogue can go hand-in-hand.

This will not go unnoticed in the White House as well. However, what matters is how the Trump administration responds or can possibly respond. Either it could threaten to withdraw from AUKUS and focus more on developing its own resources or it could double down on its commitment to shoring up Australian naval capability. However, as long as Washington continues to lack a viable programme to reverse China’s economic dominance in Australia specifically and the Indo-Pacific generally, countries like Australia will continue to manoeuvre in ways that best serve their interests. It is increasingly clear in Australia that their trade interests are best served by having stable ties with China. There is a growing appreciate of the fact that Australia’s ties with China and the US must not be mutually exclusive. This, for China, is a major victory.

Salman Rafi Sheikh, research analyst of International Relations and Pakistan’s foreign and domestic affairs. Courtesy

https://journal-neo.su/2025/07/17/between-china-usa-australia-chooses-trade-over-geopolitics/