5 - Australia and China: The Challenges to Forging a ‘True Friendship’

Summary

Australia’s relationship with China in the period 2006–10 developed in a paradoxical manner. While the relationship grew deeper, became more broadly based and assumed unprecedented prominence for both countries, it also became exceedingly complicated, controversial and difficult to manage. During this period, China’s vital importance to Australia’s economy was further affirmed. China displaced Japan to become Australia’s largest trading partner and its biggest export market, a position that had been held by Japan for almost 40 years. Burgeoning trade ties with China not only shielded Australia from the global financial crisis that afflicted most of the Western economies from 2007 but also continued to underwrite Australia’s resources boom. During the years 2006 to 2007, the Coalition government led by John Howard continued its successful China diplomacy and strengthened the bilateral relationship, attaining a level and scope unmatched in any other period.