AFA Monthly logo

9 December 2020

With Greg Earl

Australia’s five big challenges for 2021

The pandemic may have provided a diversion from other foreign affairs issues in 2020, but with a new US administration and the China–Australia relationship in a downward spiral, Australia will face five big challenges in 2021.

The China question

In 2020, Australia’s relationship with its biggest trading partner sunk to its lowest point in half a century. Rightly or wrongly, prudently or otherwise, the Australian government has taken a leading role in responding to China’s rising assertiveness – from its ban on Chinese telecommunications firm Huawei to its introduction of stricter foreign investment rules. As a result, Australia has become a test case for Chinese economic coercion, with Beijing placing curbs on imports from Australia. Last month, Chinese diplomats in Canberra released a document to the media setting out fourteen grievances with Australia and accusing it of “poisoning bilateral relations”. This document could prove to be an agenda for discussing better relations between the two countries, or it could be a roadblock. The question now is whether Australia’s allies and partners will ride to the rescue. Some of Australia’s initiatives that have angered China, like its call for an inquiry into the origins of COVID-19, were taken unilaterally, but it appears that Australia is increasingly counting on other countries to help deal with the blowback. Support has been forthcoming, but whether it can be relied upon will determine the immediate future of China–Australia relations.

Guns or butter

In the past year, Australia made significant progress in forming new security alliances in the Indo-Pacific region. A strategic partnership with India led to deeper cooperation on military exercises, a still-unsigned military-access agreement with Japan reinforced one of the region’s closest security partnerships, and the Quadrilateral Security Dialogue (between Australia, the United States, Japan and India) became more formalised amid talk of expanding its membership. But if Scott Morrison decides to hold an early election, the federal government’s focus in 2021 may shift from regional security to regional economic ties, with the government talking up its success creating jobs from diverse trading partnerships. Plans for closer economic engagement with Indonesia and Vietnam are in process, and an existing strategy for engagement with India is being implemented. Expect to hear a lot more about the Regional Comprehensive Economic Partnership, newly signed by fifteen countries, although it probably won’t operate until 2022. The government will also be pointing out it has a foot on both sides of the messy Brexit divorce, with dual UK and EU trade negotiations under way.

Tests of diplomacy

Australian diplomats like to talk about their country as the world’s thirteenth-largest economy rather than the fifty-fifth-most populous. The next year will, in various ways, test their ability to punch above their weight.

  1. Scott Morrison is shifting towards a firmer commitment on reducing carbon emissions ahead of this year’s United Nations conference in Glasgow. Last week, he announced plans to dump Australia’s use of carryover credits to achieve its emissions targets under the Paris Agreement. As one of the world’s top ten carbon emitters per capita, Australia’s reputation is always at risk on this issue. This year the pressure it faces is greater because of tougher action being promised by countries such as the United States, China and Japan.

  2. In July, the Australian Consumer and Competition Commission announced a new code of conduct that forces digital giants like Facebook and Google to share advertising revenue with traditional media. The government endorsed it this week. Now, the European Union and the United States are set to step up action against these giants for problems such as tax avoidance and lack of accountability. The ACCC has led the world on this issue and its code of conduct is a model to watch.

  3. Former finance minister Matthias Cormann is running a generously funded campaign to become secretary-general of the Organisation for Economic Co-operation and Development from June next year. This is a rare chance for an Australian to run one of the world’s top economic institutions.

Pacific troubles

Pacific nations have avoided the worst of the pandemic due to their isolation and dispersed populations, but their fragility is being revealed by the economic downturns they are experiencing. In response, the Australian government ended six years of aid parsimony to provide new money for vaccine distribution and economic recovery in the region, on top of Pacific “step-up” policies designed to fend off Chinese influence. The situation in Papua New Guinea is an example of some of the challenges Australia faces in the Pacific. Australia jumped from one favoured leader in Peter O’Neill to another in James Marape, but now Marape is in trouble, and Australia has reverted to other measures of assistance, like injecting cash into the PNG budget. Expect more sudden action on Australia’s part to preserve the stability of its nearest neighbour.

COVID-19 in Asia

Asia is emerging from the pandemic in better shape than most parts of the world. The lesson may be that a soft-authoritarian model of competent governance can work well in a health crisis, though recurring outbreaks in countries like Japan and South Korea may still test this theory. Its success thus far is a positive thing for Australia, which is increasingly dependent on economic growth in Asia, despite a number of challenges in the region, including communal tensions, territorial disputes and uncertainties about the direction of democracy. The progress of the worst-hit countries – India, Indonesia and the Philippines – will be the real test of Asia’s recovery. These countries are important new security and economic partners for Australia, but the domestic challenges posed by the pandemic may distract them from international relations.


Want more insightful discussion on our place in the world? Subscribe to the print journal to have Australia’s best voices on foreign affairs in your mailbox three times a year.

Explore subscription options.


Australia’s options for pushing back against Beijing

“At times like this it’s useful to step back to look for the patterns, constraints and opportunities (if any) in the relationship as a way to understand what might happen next.” Peter Jennings,The Strategist (ASPI)

China–Australia relations – Canberra’s path through the WTO looks to be riddled with hurdles and pitfalls

“The odds are already stacked against Australia in any attempt to make a claim with the WTO, especially if Canberra fails to settle the case with Beijing during preliminary consultations.” Su-Lin Tan, South China Morning Post

First steps for the Biden administration on the global trade regime

“While the Trump administration identified challenges to the current WTO system posed by non-market economies, particularly China, it fell far short of delivering meaningful results.” Wendy Cutler, East Asia Forum


A false start for PNG–Bougainville consultations

“Last December, 97.7 per cent of Bougainvilleans chose to break away from Papua New Guinea … The next step was for the two governments to consult and bring results of that consultation to the parliament of Papua New Guinea for final decision. Nothing much has happened.” Gordon Peake, The Interpreter (Lowy Institute)

China Inc. raises eyebrows but Japan Inc. is much more influential

“The rise of ‘China Inc.’ (~1990–2020) has seen no equivalent management philosophy or practice that has come anywhere close to the influence that Japan’s lean production has exerted. This is important because companies, and their relative success, are both an extension and crucial indicator of a country’s influence.” Damien Ma, Macro Polo (Paulson Institute)

Free from Australian Foreign Affairs

Correspondence on "Data Driven", by Danielle Cave

“As the threat from within – lone wolves, terrorists and hackers – came to dominate government attention, US internal security and law-enforcement agencies started to develop and borrow technologies and capabilities that were once the preserve of outward-looking foreign and defence intelligence agencies, turning them on their own populations.” Lesley Seebeck, HERE

“While Cave is spot-on about spycraft becoming increasingly data-driven, it is worth unpacking what this means in practice for Australian intelligence agencies, especially as they balance the roles of humans versus advanced machines.” Olivia Shen, HERE

“While we are not, perhaps yet, sleepwalking into a world of total surveillance and repressive control, democratic nations are increasingly placing limits on freedom in the pursuit of order.” Peter Rogers, HERE

Read Danielle Cave’s response, HERE



Episode 2 of The AFA Podcast out next week.

Spying in the age of COVID-19

The COVID-19 pandemic is revealing new challenges facing the world of intelligence. Which countries were equipped to quickly track data from Wuhan and beyond? How is spycraft adapting to the digital era? And how are agencies preparing for a return to great power competition?

Join Jonathan Pearlman and guests Danielle Cave and Andrew Davies from the Australian Strategic Policy Institute.

Background reading:

Danielle Cave, “Data Driven” in AFA9 HERE

Andrew Davies, “Mission Impossible” in AFA9 HERE

Listening to The AFA Podcast is easy. Each episode will be published on our website, or you can subscribe in your favourite podcast app.


Read past editions of AFA Monthly

Sign up to AFA Monthly to get each new edition in your inbox