In foreign policy, crises are sometimes circuit breakers – an unlooked-for opportunity for nations to clear away the rubble of past disagreements and focus on an urgent common objective.

Not so the COVID-19 pandemic. Internationally, the common interest of humanity in containing the pandemic has been lost in a welter of mutual finger-pointing and animosity.

At home, China’s sharp response to Australia’s call for an inquiry into the origins of the pandemic has again raised tensions in a bilateral relationship already loaded with disagreements.

The fight over Australia’s inquiry proposal is emblematic of the immense difficulty of managing relations with China.

The challenge is hard now. It will get harder.

Australia’s headache is not just that China has become much more powerful, but also that it has become more authoritarian, ideological and nationalist under President Xi Jinping.

China’s foreign and domestic policies are conflicting more often with Australia’s interests and values.

The gap between the two countries’ political, economic and legal systems is starker than ever.

COVID-19 will change many things about our world but not these fundamental fault lines. The pandemic won’t alter China’s political system or its geo-political ambitions.

No Australian government can ignore the immense clash of interests and values that today’s China creates and the limits this inevitably puts on the relationship.

But there remains a national interest case for doing what we can to prevent Australia-China relations from slipping into permanent hostility – to find space for cooperation that benefits both countries, support trade and minimise the economic cost of decisions that protect our security and sovereignty.

What won’t change

The aggressiveness of China’s response to criticism of its early handling of the COVID-19 pandemic combined with a global misinformation campaign and use of social media to stoke division has surprised even veteran China watchers.

This is a China willing to throw its weight around without regard to normal diplomatic limits or damage to its reputation and international relationships.

Chinese diplomats have been encouraged to show their “fighting spirit”, in keeping with an internal Chinese narrative of long-term “struggle” to assert China’s place in global order and to shape an international system that defers more often to Beijing’s interests.

The Trump Administration has been happy enough to keep the focus on China as questions mount about Washington’s own slow response to the pandemic.

Even so, diplomatic hard heads in Beijing must be aware that its aggressive misinformation campaign is leaving a substantial legacy of ill will in many countries that won’t be quickly forgotten. International demands for a credible accounting from China on the origins and spread of the virus will only grow.

The net effect of Beijing’s handling of the pandemic will be a further corrosion of trust in China in the United States, Australia, Europe and parts of Asia.

Elsewhere, even amid the global struggle against the pandemic, China has maintained a heavy-handed assertiveness in the Taiwan Straits, the East and South China Seas and in backing recent mass arrests in Hong Kong.

It is too early to know if this represents a continuation of previous strategy or the beginnings of a broader, calculated push to accelerate China’s regional aspirations.

Either way, China seeks an increasingly Beijing-centric regional order in which countries defer to its interests and authority. Ambitious projects like the Belt and Road Initiative (BRI) are geared to this objective.

The position Australia takes on these issues will often put us in conflict with China, as does our broader policy of encouraging multi-polarity and resilience in the Indo-Pacific in order to balance China’s power.

Similarly, China’s ever tightening net of digital authoritarianism and intolerance of any form of internal dissent or even difference will be a source of ongoing friction.

The Morrison Government’s expressions of concern about China’s systematic attempts to eradicate Uighur culture, language and religion, for example, have been consistent with many other western countries but have still generated immense push back from Beijing.

There is no reason to expect this to change. Nor is it morally tenable for Australia to silence itself.

Australia will also continue to take domestic policy decisions to protect the nation’s sovereignty and security that will affect China’s reputation, interests and companies.  

There will be no change of policy on foreign interference nor on the standards that effectively exclude Chinese companies from Australia’s 5G networks, the biggest point of contention in the bilateral relationship in recent times and a decision that has bipartisan support.

The extent of Communist Party influence over state-owned enterprises and private companies alike will continue to drive scrutiny of Chinese foreign direct investment and constrain the role of Chinese companies and technology in some sectors of our economy.

Australian policy makers, corporations and academic institutions are grappling with other dilemmas presented by an increasingly authoritarian and assertive one-party state.

For example, how to assure the integrity of our international research linkages or freedom of expression on our university campuses. Or how to manage new technologies that require stronger export controls (for example if they have potential military applications or could be used in a way that raise human rights concerns, such as surveillance and face recognition technologies).

China objects to such decisions but its record at home and abroad, including its industrial scale cyber espionage program and heavy-handed attempts to silence critics, make mutual trust hard to achieve.

Looking ahead: the art of the possible

Recent Prime Ministers have recognised Australia-China relations will be shaped more strongly by points of difference than in the past.

The space for cooperation has narrowed. There is greater patience with cool political ties and more acceptance that the relationship is vulnerable to frequent flare ups on any number of contentious issues.

This is the “new normal” of the recent past. From an Australian perspective, open to cooperation where this is mutually beneficial but also more vigilant, realistic and hard-headed in responding to challenges to Australia’s sovereignty and national interests.

Given the nature of the Chinese state and its ambitions under President Xi Jinping, it is reasonable to ask if even this more limited and clear-eyed model for the bilateral relationship is possible to sustain.

China’s challenge to some Australian interests is accelerating. Geo-political tensions over the pandemic are white hot. US-China relations are at their lowest point in decades.

Nor does Beijing accept that Australia has genuine concerns about some Chinese policies and behaviours. China’s inflexible position is that all problems in the bilateral relationship are Australia’s fault.

Demands for Australia to fix things (concede to China’s demands) are often accompanied by threats of consequences of one sort or another. Australian offers to find things to work on that are mutually beneficial lie fallow. In short, China is not inclined to engage on the terms we have offered.

It is possible these accumulated pressures will drive bilateral ties to a “new, new normal” – a permanently adversarial relationship, with bilateral and multilateral cooperation severely limited and parts of the economic relationship regularly at risk.

Whether or not we descend to this point will depend on more than the quality of Canberra’s management of bilateral ties: Australia has limited room to move without compromising important national interests and any course correction from China’s leadership will rest on factors largely outside our control. 

Still, for Australia, there is a case for trying, as difficult as it is.

The challenge from China is significant but not yet so severe that it must subsume all other Australian interests. To come to that judgement now would overestimate China’s ability freely to shape the world to suit its interests and underestimate Australia’s own resilience and national strengths.

The space for mutually-beneficial cooperation with China might have narrowed but it has not been eliminated.

No major global challenge can be solved without China’s involvement. Australia and China have shared interests in the openness of the global trading system, in long-term food security, energy and climate change, even in fighting future pandemics.

In the long run, Australia will be poorer and less resilient if more competitive relations between China and the West deteriorate to the point where collective action on such major global challenges is no longer possible.

The COVID-19 pandemic has broadened the lens on a pre-existing debate about Australian dependency on a more authoritarian and assertive China. There is an argument for looking at self-sufficiency or supply chain diversification for some critical products, technologies and materials. But such a list should be tightly targeted and minimise unnecessary cost to the economy.

The bulk of Australia’s trade with China will continue to be driven by strong complementarities. It is easy to talk of finding new markets and difficult to do in the real world. Even at lower economic growth rates, China will remain our largest trading partner and a significant source of our prosperity for the foreseeable future.

Indeed, it is possible China’s economy will recover more strongly and more quickly from COVID-19 than Australia’s other major Asian markets.

Economic dependency on China is a mindset as much as it is an economic reality. The key to dealing with it is firmness in the face of coercion, recognition that not all elements of our trade are vulnerable to retaliation, and strong contingency plans for those sectors that might be affected.

Managing relations with an assertive China requires Australian patience, consistency and steadfastness on policy over the long term.

Discipline in public messaging is not always easy to achieve in a robust democracy but is necessary. Not everything China does is an equal test of our willingness to stand up to Beijing.

The task is harder because China increasingly is conducting its diplomacy in a manner it would never accept from others. That diminishes China but is the nature of authoritarian power. Cool determination rather than indignation is the better response.

China, as it does elsewhere in the world, will also seek to play elements of Australia’s community and society off against each other. Australia will be in a stronger position if Commonwealth and state governments, together with business, can resist this obvious trap and forge a national consensus around a set of objectives for the relationship that are realistic.

Greater use of the Council of Australian Governments, or another high-level mechanism, might help improve federal-state coordination on China.

Australian states and businesses should not stop looking for opportunity with China, but they should do so with a clear-eyed understanding of the risks of dealing with today’s China and the factors which drive federal government decision-making on the bilateral relationship.

The new National Foundation for Australia-China Relations could play a useful role here. It is designed in part to bring Australian governments and business together in ways that find new economic activity that benefits both countries.

An early priority could be working with business to support the recovery of Australia’s economic relations with China. How do the tourism and international education industries, for example, restart in a COVID-19 world?

If it can be achieved, a workable relationship with China remains in Australia’s interests – one that protects Australian sovereignty, finds space for cooperation on issues of global concern and possibly allows some high-level political contact to resume. Such a relationship would be neither warm nor trouble-free. But it would better serve Australia’s national interests than a permanent slide into outright hostility.

It is understandable that some Australians, particularly those with a large stake in the economic relationship, would prefer something more than this – a return perhaps to the Howard era, where commerce was easier to separate from our security, human rights and other concerns.

But there is no going back to a different time. To think this is possible ignores the realities of today’s China and the obligation of national governments of whatever persuasion to protect Australia’s long-term sovereignty, security and prosperity.

Richard Maude is a Senior Fellow at the Asia Society Policy Institute and Executive Director, Policy at Asia Society Australia.