Following a series of policy disputes and trade tensions between Australia and China, the relationship continues to be tested. China is Australia’s largest trading partner and biggest export destination. The two-way relationship between the countries hit $252 billion in 2019.
Succeeding a turbulent year of trade due to COVID-19, PM Scott Morrisons request to inquire further into the origins and early handling of the virus in China has had further negative impacts on the trade relationship.
Many Australian industries have already suffered multiple trade strikes from China in 2020 and there are fears that the list of affected industries will just keep growing. Chinese authorities threatened a ban on Australian exports of copper, coal, barley, wine, sugar, lobster and timber.
Sanctions on Australian lobster exports would pose a dire threat to the industry, which typically exports more than 90 per cent of its catch to China. The threat to the lobster industry was culminated by live rock lobsters stranded on the tarmac in Shanghai due to Chinese fears the product was contaminated.
Agriculture Minister David Littleproud responded to the incident stating, “Australia has strong regulatory controls that underpin the integrity and biosecurity of all products exported.”
So, how could this affect the Australian economy?
Michael Shoebridge, Director of Defence, Strategy & National Security stated the rise in Australian commodity exports has really only grown in the last 5 years. He notes that the industries at risk due to this souring relationship only sold a fraction of what they sell into the Chinese markets in the present day, and back then they “were still quite profitable in those sectors.”
“Both the trade war and the pandemic have raised shippers’ awareness of the need to have more resilience in their supply chains, which will probably lead to more diverse sourcing strategies.”
With a threat of ceased trade to many Australian export industries, the Australian economy needs to reshape, reorganise, find new markets, and grow existing ones further.
The question remains in the Australian government on whether to lodge a formal complaint with the World Trade Organisation regarding the increasing tariffs and sanctions and impact on the Australian economy.