It was only a fortnight ago that Anthony Albanese was rubbing shoulders with the Chinese leadership, including powerful President Xi Jinping, and being hailed with effusive praise by the country’s state-run media.

After years of strained ties, when official communications were all but cut off, the frosty relationship appeared to be thawing.

Less than a week after that historic trip, Albanese was again talking and warmly shaking hands with Xi, this time in San Francisco on the sidelines of the APEC summit.

But only days before their second chat it turns out Australian navy divers were injured when a Chinese warship used its sonar while they were still in the water nearby.

According to an announcement by Defence Minister Richard Marles, the incident occurred “in international waters inside of Japan’s exclusive economic zone” and despite the Chinese ship receiving multiple warnings that the personnel were operating below the surface.

Albanese called the act “dangerous”, “unsafe” and “unprofessional”.

Overnight, the spokesman for China’s Ministry of Defence said Australia had made a “reckless and irresponsible accusation” over the incident.  

In Beijing a fortnight ago, in response to a question about whether he thought China would pick up the phone from the US if there was an accident or close call in the South China Sea, Albanese said he was satisfied “positive engagement” between Australia and China was increasing. 

But on Monday the prime minister would not confirm whether he had addressed the incident directly in his talks with Xi in San Francisco, saying only that it had been raised “very clearly through all of the normal channels”. 

“The consequences of these events are that they do damage to the relationship, and this certainly is an event that does damage and we’ve made that very clear to China,” Mr Albanese told Sky News.

So it does beg the question, was the show of diplomatic warmth in Beijing just that – all for show – and does this incident undo the positive progress that appeared to have been made?

Not necessarily – but it does demonstrate Beijing’s priorities.

Defence trumps trade in China’s relationship with the West

While free-flowing trade benefits both Australia and China, as both leaders were at pains to highlight, it doesn’t negate Beijing’s strongly held ambitions in the South China Sea and the region more broadly.

It also goes to show that while there are some common interests, deep and currently unresolvable differences will continue to punctuate China’s relationship with the West.

Benjamin Herscovitch from the Australian National University says this naval incident doesn’t mean China isn’t sincere about its attempts to repair ties with Australia.

“But this relationship repair won’t slow the long-term trend towards more mutual suspicion in the security realm,” he said.

Alessio Patalano, a professor of war and strategy in East Asia at Kings College London, argues it’s time for countries like the US and Australia to be realistic and start separating a positive relationship with China on issues like trade, with its military ambitions. 

“You can have a very fruitful and positive meeting with the Chinese, you can talk about climate change and supply chains in a way that is less confrontational than even 18 months ago,” he told the ABC.

“So do not expect that … that they will change their behaviour when it comes to the Second Thomas Shoal, or insofar as activities around the Taiwan Strait is considered, or the East China Sea, or indeed other parts of the South China Sea within the so-called Nine Dash Line.”

The Navy and Air Force of China’s People’s Liberation Army have been increasing their activity in the Taiwan Strait and South China Sea now for some time.