Anthony Albanese's 'real test' with China comes this year: Peter Jennings

Peter Jennings, the former head of the Australian Strategy Policy Institute (ASPI) and once a deputy secretary at the Defence Department, said Chinese leader Xi Jinping's change of heart toward Australia in recent months had shaken things up.

Orders for Australian coal had been put in and bilateral meetings between the country's officials had restarted.

President Xi's brand of wolf warrior diplomacy - a hardline, agitating form of international relations - had been swapped back out for smiling face diplomacy, a method of seeking to manage differences more delicately.

But Mr Jennings said the Albanese government was smart enough to not back down on key issues, such as the detention of Australian citizens and human rights violations in the Xinjiang region.

"It's the real test for the government. Everything will be up for negotiation," he said.

"This year, what will be interesting to watch is - are we going to keep getting the smiling face? Or are they going to go back to the wolf warrior?"

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Earlier this month, Assistant Trade Minister Tim Ayres met with China's Vice Minister of Commerce Wang Shouwen on the sidelines of the annual World Economic Forum meeting.

It's also expected Trade Minister Don Farrell and Chinese Commerce Minister Wang Wentao will meet virtually.

Mr Jennings said while it made the Albanese government look good after the former Coalition government was iced out by President Xi's China, the reality is China needs to secure its energy amid internal turmoil.

"They have not decided to purchase coal from Australia again because of the change of government, they've been buying it because they don't want to have blackouts down the east coast during winter," Mr Jennings said.

"The middle class is pretty pissed off and unhappy with the way they managed COVID so if they let in Australian wine or they let in lobsters, that's only going to be something that Chinese people want.

"We don't have to be walking on eggshells all the time to trade with China. We just need to stand up for things that we believe in."

At a rare media event hosted by the Chinese embassy in Australia, Chinese ambassador Xiao Qian was asked about his stance on disputed issues once referred to as "grievances" in a leaked document from the embassy.

Mr Xiao admitted he wanted to start the year on a good note but when asked about human rights issues, Taiwan and the detention of Australian citizens within China, the answers remained the same as they always had been.

Mr Jennings said this is the challenge the Albanese government will need to balance as the year goes on.

"One thing that I think ASPI does well is try to force governments to tell the truth about things, to be just a little bit honest with the Australian people, who are not stupid," he said.

"And that's the big test for the Albanese government in security this year."