Australian Prime Minister Anthony Albanese found himself at the center of diplomatic turbulence on October 27, 2025, as he confronted Chinese Premier Li Qiang about a recent and potentially dangerous military encounter in the South China Sea. The tense exchange took place on the sidelines of the ASEAN summit in Kuala Lumpur, Malaysia, just a week after a Chinese fighter jet released flares perilously close to an Australian surveillance aircraft.
The incident, which occurred on October 19, saw a Chinese Su-35 jet twice dropping flares near an Australian P-8 Poseidon surveillance plane operating in international airspace. According to ABC News, Defence Minister Richard Marles described the conduct of the Chinese pilot as "unprofessional and unsafe," a characterization that drew a sharp rebuke from China's Defence Ministry. In response, Chinese officials accused Australia of spreading "twisted propaganda" and insisted the Australian aircraft had entered the airspace of China's Xisha Islands without permission, warning Canberra to "immediately cease its infringement and provocation."
Despite the rising tensions, Albanese approached his meeting with Li Qiang with a spirit of frankness and diplomacy. "We have disagreements, and friends are able to discuss issues. That's what we're able to do," Albanese told reporters after the meeting, as reported by The Australia Today. He emphasized that he had raised the incident "directly and clearly" with Li, adding, "He heard the message very directly. I'm accountable for what I say. I made the position directly clear that this was an incident of concern for Australia."
Pressed repeatedly by journalists on how Premier Li responded to his concerns, Albanese remained tight-lipped. "I'm not here to report in on what people say when I have meetings. I'm accountable for what I say," he reiterated, according to The New Daily. The prime minister's refusal to divulge details of Li's reaction left observers speculating about the true tenor of the exchange, but Albanese insisted that the ability to speak frankly was a hallmark of the relationship. "Friends are able to discuss issues frankly. I did that directly, that's what we're able to do," he said.
The confrontation over the South China Sea flare incident was not the only item on the agenda during the bilateral meeting. Albanese also discussed Australia's burgeoning economic ties with the United States, highlighting the recent $8.5 billion critical minerals deal he signed in Washington with President Donald Trump. As reported by Business Standard, the agreement aims to bolster Western nations' access to rare earths and critical minerals, reducing reliance on China's dominant position in global supply chains. When asked if Li Qiang had expressed an opinion on the US-Australia minerals pact, Albanese sidestepped the question, saying only that the two leaders discussed the "success of my visit to the US" and agreed it was positive that President Trump and President Xi Jinping were scheduled to meet later that week at the APEC summit in South Korea.
China, for its part, has recently taken steps to thaw economic relations with Australia. Since Albanese's center-left government came to power in 2022, Beijing has removed a series of official and unofficial trade barriers that had cost Australian exporters up to $13 billion a year. Li Qiang, according to China's Xinhua news agency, expressed hope that Australia would provide "an open, transparent and non-discriminatory environment for Chinese enterprises to invest and operate in the country." He also signaled China's willingness to cooperate with Australia on the green economy, high-tech industries, and the digital sector.
Despite these positive signals, security concerns continue to cast a shadow over the relationship. Tensions between Canberra and Beijing have intensified in recent months amid escalating Chinese military activity in the South China Sea and Taiwan Strait. The Opposition in Australia has called for a firmer stance, with Shadow Defence Minister Angus Taylor demanding an end to "dangerous military activities" by the People's Liberation Army. The Australian government, meanwhile, has lodged a formal diplomatic protest with Beijing over the flare incident and has previously ordered China-linked companies to divest from critical infrastructure projects, citing national interests.
Albanese's approach has been to balance these security concerns with efforts to stabilize and deepen economic ties. In a speech at the ASEAN summit, he outlined his government's vision for expanding connections in the region, announcing a $175 million investment in a global investment manager owned by Australian industry superannuation funds. The funds are earmarked for sectors such as renewable energy, telecommunications, and logistics. Additionally, Albanese pledged a US$50 million (A$77 million) investment in the Australian public-private partnership infrastructure company Plenary, aimed at supporting healthcare, education, and transport projects in the Philippines and Indonesia.
"The markets and economies that we associated with our prosperity and our growth – the United Kingdom, Europe and the United States – were all on the other side of the world through the 1970s and into the 1980s," Albanese said during the summit, as reported by The New Daily. "This attitude began to change. We came to recognise the opportunity of proximity, the growth and transformation, the partnerships and potential right here in South-East Asia." He noted that Southeast Asia is projected to become the world's fourth largest economy by 2040, underscoring the region's economic importance to Australia.
While in Kuala Lumpur, Albanese also met with other regional leaders, including Malaysia's Prime Minister Anwar Ibrahim and Japan's newly-elected Prime Minister Sanae Takaichi. The flurry of diplomatic activity was set to continue as Albanese prepared to travel to South Korea for the Asia-Pacific Economic Cooperation summit, where a closely watched meeting between President Trump and President Xi Jinping was scheduled.
Despite the diplomatic turbulence, both Albanese and Li Qiang sought to project an image of "upward momentum" in the Australia-China relationship. Li told Albanese that his earlier visit to China had "injected fresh impetus to the continued growth of our bilateral relationship," and welcomed the increasing frequency of high-level exchanges. Albanese echoed these sentiments, writing on X (formerly Twitter): "Australia’s relationship with China matters. For our economy, our security and the stability of our region. Today’s meeting with Premier Li was an opportunity to continue stabilising our relationship."
As the dust settles on the latest diplomatic flare-up, Albanese's strategy of direct dialogue and pragmatic engagement faces its toughest test yet. With security concerns on one side and economic opportunity on the other, the balancing act between Canberra and Beijing remains as delicate—and consequential—as ever.