Though the United States, Canada and European Union have slapped hefty tariffs on Chinese electric vehicles (EVs) in the name of national security or combating excessive state subsidies, Australia – while still broadly in step with the West politically – has remained open to Chinese-made EVs and other products aiding in its green transition.
In contrast to its allies’ tit-for-tat trade barbs, analysts noted Australia’s “structured partnership” with China – the East Asian country sells the island nation a bevy of consumer goods, importing natural gas and iron ore in return – and lessons learned from a period of relatively high tensions between 2020 and 2023.
In a meeting with Premier Li Qiang in Laos on Thursday, Australian Prime Minister Anthony Albanese affirmed the importance of institutional dialogue, including an annual ministerial conference on climate change held in Sydney in August.
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And during Australian Treasurer Jim Chalmers’ trip to China in September, both countries stated bilateral interactions related to climate would be essential to the development of renewables and investment in low-carbon technology.
“By recognising China’s dominance in renewable energy technology, Australia can carry a ‘win-win’ mindset that emphasises mutual benefit,” said Linda Lau, head of legal at Trina Solar, a global solar power and battery storage solutions developer.
Lau – also an alumna of the Australia-China Youth Dialogue, an annual gathering of up-and-comers from both countries – attributed Australia’s divergent approach to its geographic location, economic structure and renewable energy landscape.
China, Australia’s largest trading partner, is expected to be indispensable in the green transition, and a potential producer of iron and hydrogen with zero or minimal carbon emissions.
“China leads the world in clean tech – including solar, wind, batteries and new energy vehicles – with its investments more than double those of the US or the EU,” the Australian non-profit organisation Climate Energy Finance said in a report on October 2.
Chinese direct investment into Australia plunged to a multi-decade low in 2023 with a reported US$613 million, an ebb during a multi-year period of tension precipitated by a call for an investigation into the origins of the Covid-19 pandemic by the previous Scott Morrison administration.
However, trade and investment rebounded quickly after the normalisation of bilateral ties and several high-profile exchanges – Albanese visited China in November, and Li made a trip to Australia in June.
Dong Xuyang, a China energy policy analyst with Climate Energy Finance and one of the report’s authors, said this year there has been a “material step up” of Chinese investments in Australian renewable energy projects.
After starting construction of a 60-megawatt (MW) battery energy storage system in Clements Gap, South Australia, with a total investment of A$100 million (US$67.26 million) in June, the Chinese-owned Pacific Blue has begun developing a 500MW solar farm in Queensland.
Dong said China provides cost-competitive clean tech to the global market, adding “trade barriers” from the US and EU “risk raising costs for domestic consumers and industries engaged in the energy transition”.
Despite the positive trend, Lau cautioned that the two countries’ cooperation “is not without challenges” such as lengthy foreign investment review processes and “inconsistent perspectives” on Chinese investment across Australian government agencies.
“Protectionist tendencies within Australia may also hinder Chinese companies’ involvement in the renewable sector,” she said. “Furthermore, Australia’s energy infrastructure remains relatively underdeveloped, creating uncertainty around project delivery timelines and potential returns on investment.”
Starting in 2025, the Shanghai New Energy Industry Association will work with Australia’s Smart Energy Council – an independent body for the country’s smart energy industry – in organising the Smart Energy Conference and Exhibition, an annual expo held in Australia.
John Grimes, CEO of the council, said at a panel for this year’s Canberra Networking Day on September 12 that the collaboration highlights “the importance of structured partnerships”.
In the absence of changes to restrictions on Chinese investments in Australia’s critical sectors, Dong said, the creation of joint ventures could enhance bilateral energy cooperation.
David Morris, a senior fellow at Beijing-based think tank Centre for China and Globalisation, said as China is a leading player in the green sector, Australia can benefit from supply chains in both directions by providing iron, copper, lithium and other raw materials essential in the production of green goods.
“Australia’s deep economic integration with Asia benefits everyone, as Australia provides critical supplies to developing economies, while Australia enjoys cheap imports to keep its cost of living down,” he added.
Morris described the balancing act between meeting climate goals and geopolitics as “delicate”, with China likely to remain an economic partner to Australia and the US an unshakeable ally.
“The new risks to the geopolitical balance and to the world trading system demand a mature, independent Australian approach ... [and] not being swayed by the interests of others.”
More from South China Morning Post:
- China to end Australian lobster ban by end of year, ‘huge relief’ for industry
- Australia eyes lands of opportunity amid trade diversification despite warming China ties
- Australia’s appeal as top pick for Chinese students dims as Canberra caps foreign arrivals
- Premier Li Qiang pushes China’s trade, academic agenda during Asia-Pacific tour
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