[Faseeha Hashmi] Australians know the importance of China to our economy and there is no doubt that the feelings are mutual. Indeed, China is often celebrated as Australia's biggest export market while Australia is a major investment hub for the Chinese. So when Prime Minister Scott Morrison was accused of parroting the United States in its call for an independent inquiry into the origins of COVID-19, where does this leave the state of relations with our most significant trading partner?
A Lover’s Quarrel
According to recent Department of Foreign Affairs and Trade figures, China consumes $79.5 billion worth of Australian iron ore, $13.8 billion worth of coal and $16 billion in natural gas exports. Moreover, given that Chinese steel mills are engineered to take particular blends of iron ore readily supplied by Australia, China is unlikely to shift away to another seller anytime soon. In addition, Chinese students and tourism are a major beneficial exchange. It is a fair assessment to say that China needs us, but we also need them. Certainly, this is more pertinent than ever as China warns its overseas students to be cautious of racism in Australia.
On the other hand, Australia’s enthusiasm for an independent inquiry has sent all the wrong signals to Beijing, which has abruptly decided to suspend shipments from four major beef facilities, with tariffs on barley and wine to follow. This has led many foreign policy analysts to question what on earth went wrong?
Following Beijing’s swift decision to ban various Australian exports, Chinese authorities ignored attempts by the Morrison Government to reach out and discuss trade tensions. Australia’s Trade Minister Simon Birmingham confirmed his Chinese counterpart Zhong Shan had not responded to his requests for a meeting. It is anticipated that any sanctions or tariff hikes on Australian products will likely hit our grain, wine, dairy and seafood sectors which rely heavily on China. While the Federal Agriculture Minister David Littleproud has stated that “there is no trade war” and Australia has no plans to retaliate by imposing tariffs on Chinese imports, this diplomatic tiff certainly reveals the delicate nature of Australia’s trade relations with China.
Filling in the Economic Gaps
Nevertheless, it might do Australia some good to look elsewhere. The fact is that Australia has a bit more work to do in diversifying its export markets. These realities are certainly not all doom and gloom. When mainland China's investment in commercial real estate in Australia fell after peaking in 2015, other Asian investors quickly filled the void as the flow of capital from Hong Kong and Singapore soared to record levels.