Australia-China Weekly Brief: July 2026 issues

Past issues

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• July 9 - July 16 2026

  1. Treasurer restricts shareholder rights in Northern Minerals

  Treasurer Jim Chalmers issued interim directions on July 13 blocking three shareholders – Hong Kong Ying Tak Ltd, Real International Resources Ltd (British Virgin Islands) and Qogir Trading & Service Co. (Hong Kong) – from voting or exercising rights over shares collectively ~13 percent of Northern Minerals, developer of the Browns Range rare earths project in WA. The three had been ordered in May to divest stakes but a register review after the July 2 deadline found the shares largely still in place.

  The intervention is sensitive because Browns Range' Wolverine deposit is among the highest-grade dysprosium and terbium orebodies outside the PRC, heavy rare earths critical for defence and EV magnets. Northern Minerals has a deal to supply ~65 percent of output to Iluka's Eneabba refinery, under construction, and is projected to eventually meet ~eight percent of global dysprosium and terbium demand, against the PRC’s near-total dominance of world refining.

  The PRC Foreign Ministry’s response was relatively procedural, opposing ‘overgeneralisation’ of national security.

  The takeaway: The restrictions underscore Australia’s continuing focus on limiting PRC-linked influence over critical minerals assets, while providing an interim response where compliance with divestment orders remains unresolved. It also illustrates that restricting such influence and establishing an alternative rare earths supply chain are related but distinct policy objectives.

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  2. Australia joins joint statement marking the South China Sea arbitral award anniversary

  On July 12, one week after the PRC’s ballistic missile test into the South Pacific, Australia joined 13 other nations – Canada, Estonia, Germany, Italy, Japan, Latvia, Lithuania, New Zealand, the Philippines, Romania, Slovenia, the UK and the US – in a statement marking the 10^th anniversary of the 2016 South China Sea arbitral award.

  The statement reaffirmed that the award is final and legally binding, rejected the PRC’s expansive historic-rights claims and opposed coercive interference with lawful maritime and air operations.

  The PRC responded by declaring the ruling null and void, demanding the signatory countries stop ‘stirring up trouble over the South China Sea issue.’

  The takeaway: Repeated multilateral affirmation is diplomatically important because it keeps the 2016 award politically salient and limits efforts to normalise non-compliance. However, regional participation was limited. The Philippines was the only ASEAN signatory and Japan the only other Asian signatory. The statement therefore reinforces support among US partners and European governments, but does not demonstrate a regional consensus.

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  3. China widens access for Australian canola to private crushers

  The PRC will allow private processors to apply for import permits for Australian canola, extending access beyond trial purchases previously limited to state trader COFCO. It is the next step in a normalisation process running since COFCO's trial cargoes began around November 2025, with cargoes still require processing at approved facilities near designated ports.

  The PRC banned Australian canola in 2020 over alleged blackleg fungus detections. The PRC is the world’s largest canola importer, while Australia is the second-largest exporter behind Canada.

  The takeaway: Allowing private processors to import Australian canola broadens the potential buyer base and makes the trade more commercially scalable. It also provides the PRC with an additional supply source alongside resumed Canadian imports, which are expected to retain the largest market share. The development is a meaningful step in trade normalisation, although access remains controlled and exposed to regulatory and political risk.

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  4. Chinese battery imports expand alongside Australia's storage rollout

  On July 13, the Financial Timesreported that Australia had become the third-largest importer of Chinese batteries, behind Germany and the US, as more batteries were installed to store electricity from rooftop solar and large-scale renewable energy projects.

  The takeaway: Lower-cost Chinese batteries are materially supporting Australia’s energy storage rollout while deepening dependence on PRC manufacturing. This highlights an asymmetry in Australia’s economic security policy. Canberra is restricting PRC-linked control of upstream critical minerals assets while accepting substantial downstream concentration where Chinese scale and pricing deliver immediate energy system benefits.

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  5. China’s Ambassador preparing to conclude posting

  PRC Ambassador to Australia Xiao Qian is expected to conclude his Canberra posting within two weeks, after arriving in Australia in January 2022.

  Xiao’s tenure spanned a substantial shift in the bilateral relationship, from near diplomatic paralysis and broad PRC trade restrictions on Australian exports to renewed leader-level dialogue and the restoration of most affected trade. Tensions nevertheless persisted, including on Taiwan, foreign interference, Chinese investment in critical minerals and infrastructure, and regional security.

  The profile of Xiao’s successor may signal Beijing’s preferred diplomatic emphasis, but is unlikely to alter the relationship’s underlying points of friction.

• July 2 - July 9 2026

  1. China’s submarine-launched missile test jolts South Pacific security

  On July 6, the PLAN fired a nuclear-capable, long-range ballistic missile with a dummy warhead from a submarine into the South Pacific, a rare foray into international waters. Reports place the splashdown near Tuvalu and Nauru.

  Regional governments, including Australia, received only a few hours of advance notice before launch, short of the typical 48-hour expectation. Prime Minister Anthony Albanese described it as ‘a provocative act’. Beijing called it a ‘routine arrangement’ of annual military training and urged against overinterpretation.

  The takeaway: The test was not unprecedented in capability terms as the PRC has long been developing and fielding submarine-launched ballistic missile capabilities, but it was unusual and consequential in this setting. The launch highlighted that Australia’s emerging South Pacific treaty lattice is a political and diplomatic constraint, not a near-term military constraint, on PLA power projection. It also strengthened Canberra's Pacific security pitch, giving Albanese a unifying regional grievance mid-Pacific tour.

  The timing, coinciding with the signing of the Australia-Fiji defence agreement in Suva, invites signalling interpretations, but the evidence remains inconclusive. Pre-positioned PRC surveillance vessels points to advance planning. Whether Beijing chose the precise timing with Australia’s South Pacific diplomacy in mind is harder to establish, though Albanese’s Pacific itinerary had been public since July 3 and, as one expert anticipated, ‘there is very little in Chinese statecraft that happens by chance.’

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  2. South Pacific diplomacy accelerates 

  Prime Minister Albanese visited Suva and Honiara from July 5-7.

  In Suva, Albanese and Fijian Prime Minister Sitiveni Rabuka signed the Ocean of Peace Alliance / Veitacini Treaty, a mutual defence treaty committing both countries to consult on security threats and ‘act to meet the common danger’ if either is attacked. The agreement is Fiji's first formal alliance and Australia's fourth. Foreign Minister Penny Wong noted that Rabuka and Fiji first proposed the alliance.

  In Honiara, Solomon Islands Prime Minister Matthew Wale said, ‘China's a good friend of Solomon Islands, but this [missile test] is not something a friend does.’ He confirmed that as Pacific Islands Forum (PIF) chair he had registered a protest with the PRC ambassador and that Solomon Islands had lodged a protest note.

  Wale said the region did not want any country, ‘China, America, anybody’, testing ICBMs in the South Pacific. Pacific Island reaction extended beyond Honiara, with Tuvalu and other Pacific Island leaders criticising the use of the region as a missile-testing ground.

  The takeaway: The Fiji alliance, alongside the Australia-Vanuatu Nakamal Agreement signed on June 29, point to a rapid consolidation of Australia's South Pacific security relationships. Wong’s emphasis that Fiji first proposed the alliance is politically useful as it helps Canberra frame the treaty as Pacific Islands-led, making it harder for Beijing to cast future negotiations simply as Australia-imposed.

  Wale’s protest is notable because his PIF chairmanship gives it weight beyond Honiara. But it should not be overstated. His formulation was even-handed (‘China, America, anybody’) and registered Beijing’s conduct as a political cost without abandoning the relationship.

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  3. Taiwan pressure points: Coast Guard patrols and Perth office dispute 

  Australia raised concerns with PRC officials on July 3 about China Coast Guard (CCG) operations east of Taiwan. On July 4, the CCG described the patrols as a standing rotation in what it called the PRC’s ‘jurisdictional waters.’

  Separately, The West Australian reported that Taiwan had proposed to open a representative office in Perth – its fifth in Australia – and that the PRC Embassy in Canberra had lodged a protest with DFAT, urging the government to reject the proposal.

  The takeaway: These developments show Beijing narrowing Taiwan-related space on two fronts. The CCG patrols target Taiwan’s external operating environment by normalising PRC enforcement activity east of the island and testing regional tolerance for sustained grey-zone presence.

  The Perth office issue targets Canberra’s domestic policy space by pressing Australia to block a Taiwanese presence that would normally sit within the flexibility of its one-China policy. Beijing’s objection may also reflect concern that a Taiwan office in Perth would give Taiwan visibility in a city increasingly central to Australia’s AUKUS submarine program.

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  4. Hong Kong bounty display targets Australia-based activists

  According to a July 5 report by The Sydney Morning Herald, a permanent national security gallery at the Hong Kong Museum of History lists individuals wanted by Hong Kong authorities on a display of ‘absconders’. The gallery cites Australia’s foreign interference laws to support its claim that Hong Kong’s national security framework is ‘consistent with the practices of countries around the world.’

  On the list are Australia-based activists Ted Hui and Kevin Yam and UTS academic Feng Chongyi. Each carries a HK$1 million (A$182,000) bounty over alleged national security offences. The exhibit also features Australian dual citizen Gordon Ng, jailed over his role in an unofficial primary election.

  The takeaway: The exhibit repurposes Australian law to legitimise Hong Kong’s national security framework, despite Beijing having listed Australia’s foreign interference laws among its ’14 grievances’ against Canberra in 2020.

  The bounty display also has an effect beyond prosecution. By keeping Australia-based activists publicly marked as wanted persons, it reinforces deterrence and potential self-censorship among diaspora communities in Australia.

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  5. Domestic China-risk lens: Telstra speculation and Port of Darwin

  Telstra outage

  A nationwide Telstra outage on July 8 prompted One Nation deputy leader Barnaby Joyce to suggest possible PRC involvement: ‘I don't want to be paranoid, or a conspiracy theorist, but we know there is the capacity for China to affect that sort of software and that sort of network.’ Opposition Leader Angus Taylor called for investigation, saying he had ‘no idea’ whether there was a PRC link but understood ‘why Australians are drawing that connection now’. Telstra’s chief financial officer subsequently said there was no evidence to suggest ‘malicious activity’.

  The episode is notable for the speed with which the PRC entered the public debate. It points to a domestic environment increasingly primed to interpret critical infrastructure disruptions through a national security lens, with the PRC serving as both a suspicion frame and a point of pressure on the government. 

  Port of Darwin

  On July 7, Defence Minister Richard Marles told Sky News that the government still wanted the Port of Darwin returned to Australian hands.

  With Beijing having previously linked divestment to potential trade consequences, the port remains a standing candidate for retaliation if the bilateral relationship deteriorates. Marles’ reluctance to identify a likely buyer also suggests the commercial exit remains unresolved.

• June 25 - July 2 2026

  1. Australia-Vanuatu pact highlights China competition in the South Pacific

  Prime Minister Anthony Albanese and Vanuatu Prime Minister Jotham Napat signed the Nakamal Agreement in Canberra on June 29, nine months after Port Vila rejected an earlier draft. The agreement commits Vanuatu not to permit any foreign military base or military infrastructure on its territory and to consult Australia (without giving Canberra a veto) on third-party engagement in critical infrastructure.
  
  The agreement does not name the PRC but its context is unambiguous. Canberra has long been concerned that PRC-financed infrastructure, including the Luganville wharf expansion, could support a future naval foothold. Beijing’s Foreign Ministry responded that Pacific cooperation should not be used as ‘an excuse for geopolitical contest’. 
  
  Vanuatu's separate development agreement with the PRC, the Namele Agreement, remains unsigned pending Beijing's clearance; Napat said the text would be shared once cleared by Beijing. 
  
  The takeaway: The Nakamal Agreement is a material gain for Australia’s Pacific strategy. It codifies the no-foreign-base position and formalises consultation on sensitive infrastructure, but it does not close off PRC influence. The PRC remains Vanuatu’s largest external creditor and Port Vila’s non-aligned position means competition will continue. 
   

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  2. Chinese Ambassador challenges Australia’s foreign interference assessments

  On July 1, The Sydney Morning Herald and The Age published in their print editions an opinion piece by PRC Ambassador to Australia Xiao Qian rejecting Australian and Five Eyes assessments of PRC-linked espionage and interference. 
  
  Xiao accused unnamed Australian organisations and media outlets of ‘fabricating and hyping’ the security threat posed by the PRC and issued a blanket denial of PRC interference in Australia. He criticised footage referencing pending foreign interference prosecutions played ahead of ASIO Director-General Mike Burgess' Annual Threat Assessment on June 25, and characterised a June Five Eyes bulletin on PRC military intelligence targeting government personnel across partner nations as ‘slander’.
  
  ASIO rejected the criticism and pointed to two court-proven foreign interference cases involving conduct linked to Chinese state interests. 
  
  The takeaway: The intervention is unusually direct for an accredited envoy. It contests, in the host country's press, the host's security agency, allied intelligence reporting, media reporting and matters before the host’s courts, seeking to undermine the credibility of Australia’s security framing. 
  
  The op-ed also invoked ‘non-interference in each other's internal affairs’ as a tenet of PRC foreign policy. Yet the ambassadorial critique was of a kind Beijing routinely rejects as interference when directed at its own legal processes, including in response to Australian representations on Yang Hengjun. The parallel is inexact but the asymmetry does not favour Beijing.

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  3. Australia raises concerns over China’s extraterritorial ethnic unity law

  The PRC's Law on Promoting Ethnic Unity and Progress came into force on July 1. Article 63 provides that persons outside the PRC may be ‘pursued for legal responsibility’ for actions deemed by Beijing to ‘undermine ethnic unity’ or ‘create ethnic division’. 
  
  A DFAT spokesperson confirmed that Australia had raised concerns directly with the PRC and at the UN Human Rights Council, citing the law's potential to ‘curtail the rights and freedoms of individuals beyond [the PRC]'s borders.’ Beijing rejected international criticism, with Vice Minister of Justice Hu Weilie saying the provision had been ‘distorted and misinterpreted.’
  
  The takeaway: Article 63 asserts PRC jurisdiction over speech and association in other states, converting lawful Australian advocacy into legal exposure within the PRC. Its practical effect lies in deterrence as well as in prosecution. A deliberately vague standard, travel exposure and the documented pattern of pressure applied through family members in the PRC combine to encourage anticipatory self-censorship, a chilling of lawful civic participation within Australia that diaspora organisations have warned of. 

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  4. Other developments: Safeguards, capability-building and commercial engagement

  Foreign Arrangements Scheme amendments
  On July 1, the Australian government introduced amendments to the scheme to sharpen national interest oversight of foreign arrangements with subnational governments and public universities while easing aspects of lower-risk compliance. The changes are country-agnostic but strengthen Canberra’s ability to scrutinise and, if needed, intervene in subnational agreements affecting national security or foreign policy, including those involving the PRC.
  
  Building Asia Capability report
  The House of Representatives Standing Committee on Education’s report renewed attention to Australia’s Asia capability gap, including the need to strengthen priority language pipelines such as Mandarin Chinese, Indonesian, Hindi and Japanese. This focus is welcome, but results remain to be seen. Australia has repeatedly recognised the need for Asia literacy, yet past initiatives have produced uneven gains and language enrolments have continued to thin.
  
  China International Supply Chain Expo 
  Australia was ‘Guest Country of Honour’ at the 4th China International Supply Chain Expo in Beijing (June 22-26), its first official national-level presence, emphasising clean energy and smart agriculture. A trade-facing counterpoint to a week dominated by security friction, a miniature of a relationship in which commercial deepening and strategic hedging proceed on parallel tracks.