The period 2001–05 represents a landmark in Australia–China relations. During these years, the bilateral relationship deepened and broadened to an extent that few observers had foreseen. The foundation of the burgeoning relationship was undoubtedly the enormous expansion of trade. By 2005 China had emerged as Australia’s second-ranking trading partner and replaced the USA as Australia’s second largest merchandise export market. Bilateral trade continued to grow strongly, driven by China’s booming economy and its surging demand for Australia’s energy and mineral resources. In May 2005 the two countries began negotiations on a free trade agreement that, if concluded, would further bind the two economies. Underpinned by strong trade ties, bilateral political, security, and cultural relations also strengthened and broadened significantly. These were marked by increasingly frequent high-level visits in both directions, institutionalised dialogues on political, defence, and security issues, and greater people-to-people contacts. During the period under review both sides sought to elevate the relationship to a ‘strategic’ level.

The chapter covers inter-State political and economic relations and transactions. Five chapters span diplomatic and consular relations, diplomatic and consular protection, unilateral coercive measures short of the use of force, the law of treaties and international economic law. The first examines the closure of Germany’s Pyongyang embassy, Germany’s call to protect the US embassy in Iraq, Germany denouncing the arrest of the UK ambassador to Iran, the agrément of the German ambassador to Poland, the difference between summoning and inviting an ambassador, Iran condemning the German ambassador, the request of the German embassy in Bangkok for protection, co-locating diplomatic premises and Indonesia declaring a German diplomat a persona non grata. The third looks at the implementation of the Libyan arms embargo and Germany’s enforcement of sanctions against North Korea. The fourth addresses Germany appealing to Iran not to execute persons who were minors at the time of the crime and the German Chancellor’s remarks on breaching international law. The fifth comprises Germany’s proposals in the Vattenfall arbitration and Germany’s support of reforming the Energy Charter Treaty.