The 2016 Australia–China joint economic report, Partnership for change ^[1]—a study undertaken by the China Center for International Economic Exchanges and the Australian National University—argues that ‘Capturing the economic potential of the relationship will depend on how both the public and private sectors in Australia and China engage up close and shape the relationship.’ Getting the most out of the relationship for both countries, it states, will ‘require a functional understanding among policymakers, corporate leaders and the broader community of the changes that will shape China and the regional and global environment in the next 10 years’.

Five years on, the relationship has certainly changed, but not in ways that the authors of that report would have hoped or imagined. While there’s not much partnership or ‘up close’ engagement to speak of these days, certainly at the government-to-government level, the relationship is being shaped by a more attuned Australian understanding of China’s tactics and intentions.

Beijing’s nationalist rhetoric and its efforts in recent years to permanently reshape the strategic landscape of the region have changed everything. Once peripheral concerns within the Australian community about China’s willingness to use force and coercion to achieve its goals are now widespread. Last week’s halting of a range of exports from Australia in violation of both World Trade Organization rules and the 2015 China–Australia Free Trade Agreement ^[2] is the latest in a series of actions that demonstrate Beijing’s willingness to punish those it thinks have stepped out of line.

That these punitive actions are politically motivated is now indisputable. Summoning the impulses to downplay the seriousness of the challenge we face is much harder than it used to be. The relationship needs to change, but how?

Our biggest challenge might lie in confronting the most basic assumption that has guided Australia’s engagement with China since the establishment of diplomatic relations in 1972—namely, that economic activity is always going to be the main route to advancing the bilateral relationship.

If the boundaries between political, economic and strategic interests continue to blur and China’s leaders continue to expect deference in return for that activity, it will certainly not be. Fading delineations mean it is no longer possible to isolate the economic or strategic component of the relationship without fear of political sensitivities getting in the way.

In that bleak environment, a new emphasis on values is likely to have a more positive impact on the overall development of the bilateral relationship. It has always felt to me that not emphasising values in our dealings with China inadvertently signalled to Beijing a willingness to trade them away.

Looking back, the problem for those who have sought to keep values at arm’s length from the Australia–China relationship, particularly the economic dimension of it, was generally understood not as one concerning the importance of values themselves, but the likelihood of upsetting China when we are forced to act in accordance with them, or of looking weak and unprincipled when we should but do not.

With China already upset with us and the bilateral relationship at near breaking point, it makes little sense to keep thinking this way. Now might be the time to try something new.