China is Australia’s biggest trading partner. However, the once-strong trade relationship between Australia and China has deteriorated, leading China to ‘indefinitely’ suspend economic dialogue in May 2021. So, why did this once prosperous economic relationship break down?
The Chinese government announced it would no longer engage in economic dialogue with Australia.
This came after the Australian government canceled two deals under the Asian giant’s multibillion-dollar Belt and Road Initiative.
The relationship between the two countries has been fraying since 2015 when Australia became the first country to publicly block Huawei from participating in its 5G network. It was concerning the tech giant would divulge data to the Chinese government. Huawei has repeatedly denied these claims.
The dispute then escalated in 2020, when Australia joined 14 other countries to demand further investigations into the origins of the coronavirus. China responded by placing tariffs and restrictions on Australia’s major exports including seafood, beef, wine, coal, and barley. These targeted exports were worth $25 billion in 2019, or 1.3% of Australia’s GDP. A year later, China refused to engage in economic dialogue with Australia.
Australia has been trying in vain to revive the dissolved communication lines ever since and is counting on the World Trade Organisation to settle the five-year dispute.