By Colin Packham
SYDNEY (Reuters) – Australian Prime Minister Scott Morrison said on Wednesday that China should reform its economy to end a trade war with the United States that is damaging the global economy, comments that could strain ties with the country’s largest trading partner.
Speaking days before a meeting between U.S. President Donald Trump and Chinese President Xi Jinping that is seen as vital in preventing an escalation in their trade war, Morrison said China’s economy should reflect its maturity.
“Forced technology transfer is not fair. Intellectual property theft cannot be justified, regardless of where it started,” Morrison said in a speech in Sydney.
“Industrial subsidies under the model do promote overproduction. China’s rise has now reached what I would describe a threshold level of economic maturity.”
The Chinese embassy did not immediately respond to requests for comment.
Rarely going beyond urging an end to the U.S.-China trade war, Morrison’s rare critique of China threatens to stoke tensions with Beijing.
“China will not be happy at all with these comments,” said Haydon Manning, a political science specialist at Flinders University in South Australia.
“It may signal that after his election victory in May, Morrison may be shifting in how the government will approach its relationship with China.”
While two-way trade between the nations has grown since Australia and China signed a trade pact in 2015, increasing to a record A$183 billion ($127.46 billion) last year, the bilateral relationship has been strained since the free trade agreement.
In late December 2017 former Australian prime minister Malcolm Turnbull accused China of meddling in its domestic affairs, while the relationship was further soured by Canberra’s decision last year to ban Huawei from its 5G broadband network.
But after Morrison became prime minister in August, he sought to repair the relationship with China by refraining from public criticism of Beijing, though irritations between the two continued.
Australia and China are both seeking greater influence over the Pacific, a sparsely population region that controls vast resource-rich oceans.
Morrison’s comments will be warmly received in Washington, which has grown frustrated in recent months by its allies’ approach to diplomacy with China.
“China prefers to hear any criticism behind the scenes, convincing countries that there will be repercussions if they don’t,” said a senior U.S. diplomatic source, who declined to be named as he is authorised to talk to the media.
“But its bark is worse than its bite. Sunlight the best disinfectant.”
(Reporting by Colin Packham; Editing by Michael Perry)