What happened?
On 26 January, the former Chinese Ambassador to Indonesia and a veteran diplomat Xiao Qian undertook his new assignment as the Ambassador to Australia. In his initial remarks, Ambassador Xiao urged Australia to rectify its wrongful policies toward China and hoped for friendlier relations between the countries. 

He said: "A sound China-Australia relationship serves the fundamental interests of the two countries and two peoples. China and Australia differ in their history, culture, social systems and stages of development, but as long as we adopt a long-term and big-picture perspective, adhere to the principle of mutual respect, equality and mutual benefit, and stay firm in the right direction of bilateral relations, the China-Australia relationship will keep moving forward and make further progress."

Senior federal government ministers in Australia dismissed the message by Xiao and are sceptic of China's sudden change in behaviour. Defence Minister Peter Dutton referred to China's turbulent relations with the Philippines, Vietnam, India and other countries and called it aggressive and unacceptable. Other Australian diplomats remain highly doubtful of China's intentions and have expressed caution against expecting major changes in China's policies towards Australia.

What is the background?
First, recent deterioration in relations between China and Australia. China's relations with Australia began deteriorating in 2018 when the latter became concerned regarding the Chinese influence on Australian politics, universities, media and other facets of the society. Australia's decision and encouragement to the Five Eyes Alliance against employing Huawei for their 5G networks, the push to investigate the COVID origins in China, increased tariffs and trade bans, passing of bills that harm the Chinese interests in Australia further pushed the two countries away. In the past few decades, China also changed its foreign policy strategies to become more aggressive in drawing its redlines and taking action against countries for intervening in its internal issues. 

Second, major bilateral issues. In the 21st century, the Chinese influence in Australia's trade posed a threat to the local products and markets in the country. Furthermore, China's increased tariffs on Australian barley, wine and coal greatly affected the country's trade relations. China also gained political support by funding development and infrastructural projects in the Pacific Island countries. In 2021, China initiated projects to develop the Kiribati island, thereby allowing the country to establish its military presence in the region. Taiwan is another issue that continues to tear the two countries apart. Australia has always extended its support to Taiwan and supported the US presence in the Taiwan strait, triggering harsh reactions from China. 

Third, Australia building alliances after the fallout. The two countries have been unable to mend ties post their fall out because Australia considered the trade war as a wake-up call and decided to expand its relations with other countries in the Indo-Pacific. It also gave more importance to institutions such as the Five Eyes Alliance and Quad which are anti-China in its strategies. Australia also focused on improving its bilateral relations with other countries such as the Philippines, Indonesia, India and more to make up for the lost trade opportunities after the fallout. 

What does it mean?
Although, China has issued numerous warnings to the Pacific country, the statement made by Ambassador Xiao seems mellow and reflects a readiness within China to mend the sour relations with Australia. However, Australia continues to remain uncertain about China's intentions as they do not foresee a change in Chinese policies at least until the elections in 2022.