Jakarta, a lamington and 'untapped potential': Albanese's plan to avoid Chinese trade war

Anthony Albanese wants deeper ties with our regional allies to avoid Australia being exposed to Chinese trade aggression.

Anthony Albanese wants Australia to be less economically reliant on China.

KEY POINTS:

• Labor wants to deepen ties with ASEAN partners to decrease Australia's exposure to Chinese trade aggression.
• Anthony Albanese is in Jakarta for the ASEAN summit, before travelling to New Delhi for the G20.
• At the ASEAN summit, Albanese will tell delegates there is 'so much potential still untapped' in the region.

Australia will move to ensure it cannot be left exposed to Chinese trade aggression, after a series of sanctions imposed by Beijing crippled its exports.

Prime Minister Anthony Albanese has jetted to Indonesia for the Association of Southeast Asian Nations (ASEAN) Summit where he will unveil his government's Southeast Asia Economic strategy, centred on easing Australian reliance on China by deepening relationships with other regional powers.

"There’s so much potential still untapped," he declared in Jakarta.

Angered by the former Coalition government's call for an inquiry into the origins of COVID-19 in 2020, Beijing imposed tariffs on a host of Australian products - worth $20 billion annually - and cut off high-level communication.

Prime Minister Anthony Albanese and partner Jodie Haydon arrive in Jakarta for the Association of Southeast Asian Nations (ASEAN) Summit in Indonesia. Source: AAP / Mick Tsikas

But Labor believes Australia was further exposed by the former Coalition government dropping the ball on engagement with Southeast Asia, which as a whole is projected to be the world's fourth-largest economy by 2040.

“Economics is power, economics is strategy,” a senior government source said.

“There was not sufficient attention to the other ways you can try and assure Australia’s security."

Spruiking his message to the ASEAN Indo-Pacific Forum on Wednesday, Albanese insisted Australia's ties to ASEAN went beyond an "accident of geography or the virtue of history".

The prime minister declared that the strategy, which emerged from former Macquarie Bank boss Nicholas Moore's Southeast Asia Economic Strategy Review, is the "most significant upgrade of Australia’s economic engagement with ASEAN for a generation".

"Australia’s economic engagement with the region has not kept pace with the growth of Southeast Asian economies," he said.

"Australia should be a larger trade and investment partner for Southeast Asia. The ambitious plan we are sharing today takes us beyond catching-up, it positions us for what’s ahead.

"If you’re lucky enough to be served a quintessential Australian lamington, the coconut is likely to hail from the Philippines. Our economies and our cultures are already so intertwined, in ways big and small."

The Southeast Asia Economic Strategy Review stressed the need for:

• Deeper understanding of Southeast Asian markets
• Removing trade barriers with the region
• Ensuring Australia and the region have the skills to work together
• Increased investment

Labor also views its relationship with the region as central to its net zero transition.

Much of Australia's wealth has been driven by Chinese demand for its coal, though the government believes a global shift away from fossil fuels provides an opportunity for Australia's rare earth mineral industry.

Government believes future of trade with China is uncertain

Beijing has signalled a shift in its approach recently, lifting sanctions on a number of Australian products and reopening lines of communication between ministers.

In November, Albanese became the first Australian leader to hold bilateral talks with Chinese premier Xi Jinping in six years, while a host of Labor frontbenchers have also met their Chinese counterparts.

But while the Australian government believes the relationship has stabilised since the turbulent 2020-22 period, it views the future as uncertain.

It is also concerned about unexpected sluggishness in the Chinese economy, which Treasurer Jim Chalmers has conceded will hurt Australian exports.

“You’ve got to think about the markets that are growing, with large numbers of young people with increasing disposable income over the next ten years," the senior government source said.

Albanese has also put significant effort into deepening ties with India, travelling to India to meet Prime Minister Narendra Modi in March, before hosting him in May of this year.

While Australia has been working to secure free trade opportunities in New Delhi, there is also acknowledgement that India has a more protectionist stance and multiple other options need to be considered beyond it and China.

After attending the ASEAN Summit, Albanese will head back to India for the G20 Summit beginning this weekend.