PERSPECTIVES | Australia-China policy: Guardrails, not walls

Farrell demurs

The next morning, McGowan’s warnings came to life. At Parliament House, David Speers questioned Trade Minister Farrell about the critical minerals deal recently signed by Prime Minister Anthony Albanese and US President Donald Trump. 

Getting straight to the point, Speers asked, does the US-Australia deal serve our interests? Farrell acknowledged the geology: critical mineral deposits are deep, scattered and short-lived. Australia needs partners. ‘We aim to be reliable suppliers to the world,’ he said. 

Speers pressed harder. Will the world buy Australian critical minerals if they cannot compete on cost and speed? Farrell talked about reliability and partnerships. He evaded the issues of cost and speed. He did not mention the PRC, on which Australia’s miners rely for processing before materials can be made into end products, and which remains the largest buyer.

The question hung in the air. Was this deal about economics or optics? Did Albanese trade minerals sovereignty to secure a Trump meeting and calm commentators and voters nervous after his July 2025 visit to Beijing?

Farrell’s avoidance answered the question.

Why politicians bend

Votes beat value. That is the simple truth. Fear travels faster than facts. A tough sound bite beats a spreadsheet. Ministers tend to read polls, not feasibility studies.

Since 2017, the fear of looking soft on the PRC has driven political calculation. Broad public wariness about the PRC, as shown by successive polls makes tough rhetoric ostensibly appear the safer choice. Explaining the economics of rare-earth processing loses to simple soundbites. The risks of appearing weak feel immediate and personal for politicians. The gains from complex trade deals remain distant and impersonal.

This is where McGowan’s warnings bite hardest. If we cannot say clearly who will buy our products and why the numbers matter, we fall back on politics. We talk alliance optics, not purchase orders. We sell the notion of ‘reliability’ while the PRC sets pace and price in the markets of current and future relevance, such as EVs, wind turbines, electronics.

The Australia-US critical minerals deal has two fatal problems. First, it bypasses the world’s dominant processor and consumer. The PRC controls refining because it invested early, accepted lower margins and bore enormous environmental costs. If Australia cannot compete on cost and speed, buyers will return to the PRC regardless of diplomatic summits.

As I wrote recently in The Australian Financial Review, this risks becoming a massive subsidy for a market that does not yet exist. The government can provide finance and infrastructure. It cannot conjure demand. If our processing cannot beat the PRC’s, buyers will walk.

Second, the deal suggests Albanese chose short-term political cover over long-term economic logic. He met Xi Jinping in July. Voters grew nervous. A minerals agreement with the US provided balance. The optics worked. The economics remain uncertain.

What Australia needs

McGowan offered a blueprint: economic pragmatism first. Do not conflate trade with strategic alignment. The PRC’s demand for clean energy minerals is growing. American partnerships should complement Chinese markets, not replace them.

Second, build institutional frameworks to manage disputes. The recent stabilisation of diplomatic ties shows this works. Revive people-to-people contact through tourism, students and cultural exchange. This counters misperceptions.

Third, frame engagement as security: more trade with clear rules; more students with better safeguards; more joint work on climate and oceans. Remind voters that prosperity funds defence, not the other way around.

Australia has always balanced economic integration with strategic autonomy. It does not have to choose between US security and PRC markets. It can have both, if politicians find the courage to simply say so.

The path forward

All in all, the ACBC Canberra Networking Day revealed Australia at a crossroads. One path leads to reactive policy driven by anxiety. The other leads to resilience grounded in national interest.

McGowan’s message is urgent. Australia is a trading nation on Asia’s doorstep. It cannot retreat into a fortress mentality. It cannot afford to follow fringe voices or chase political safety at the expense of economic sense.

The government knows this. Farrell’s demurrals proved it. Critical minerals without competitiveness are effectively worthless. Bypassing the PRC risks failure. He cannot say so publicly. That would require defending unpopular truths to skeptical voters.

This is the gap that troubles me: between economic reality and political theatre; between McGowan’s plain speaking and Farrell’s platitudes.

Australia needs leaders who will stand firm on core principles and defend them loudly. It needs policy driven by the national interest, which includes economic prosperity, not by marginal seats. Unless that changes, Australia will keep choosing votes over prosperity. That is a choice the nation cannot afford.