Clouded by a deteriorating China-Australia Relationship, Australian trade has gone through a year of ebb and flow, which needs objective and rational analysis instead of jumping to conclusions based on one final numerical trade balance.
Held up by resilient iron ore export and its surging prices, Australia has recorded export increase since last September, providing an ego boost to some Australian media outlets and politicians, claiming that Australia’s unfriendly approach to bilateral relations has had little impact on Australia’s trade position.
According to the Australian Bureau of Statistics (ABS), the nation’s export of goods in December 2020 rose 16 percent month-on-month, among which metalliferous ores increased by 22 percent and cereals surged by 216 percent.
The increase in metalliferous ores to China was driven by iron ore, up 25 percent to AU$9.87 billion, accounting for 79 percent of Australian iron ore exports last December, according to an ABS statement. Additionally, one third of the total wheat exported from Australia in the month was purchased by China.
It is clear that Australia’s export rebound was driven by shipments of iron ore and grain products to China, which was the only major economy that achieved positive economic growth in 2020.
Taking a longer view, Australia’s economy shrank 7 percent in the second quarter of 2020, the steepest decline since records began in 1959. And, the Morrison administration chose to tie itself to the Trump administration’ anti-China campaign and damaging its relation with China, its largest trading partner, to historical low levels, placing businesses at unnecessary risks.
Also, China has initiated anti-dumping measures on Australian wine and barley, and inspection measures on timber and others in order to protect the lawful rights and interests of Chinese businesses and consumers.
Blindly celebrating iron ore exports while ignoring the underlying problems of many other industries is short-sighted. China is the largest market for many Australian products and services, from agricultural goods to services including education and tourism.
Local media reported that a major Australian salmon producer is planning to decrease export to China due to the trade tensions, however, whether exporters can find alternative markets as promising as China is being proved to be a very difficult job. As a major contributor to the global economic growth over an extended period, China will continue to be the leading power driving the recovery of the global economy post-pandemic.
Given China’s industrial upgrading, the proportion of imported raw materials among China’s total imports is bound to decline. And with the advancement of the Belt & Road Initiative, China is fostering and deepening economic ties with many other developing economies. Many of these countries are rich in resources and minerals, intending to boost their economic growth through enhancing trades with China. These new connections provide China with ample opportunity to diversify supply sources.
Globalization has made countries more interdependent, with trade and economic relations becoming increasingly intertwined. Political mutual trust is undoubtedly the basis of sound economic and trade cooperation.
With the rise of Asian economy, Canberra is going through an identity crisis. Seeing itself as a bulwark of the Five Eyes Alliance, Australia, yet has been economically dependent on Asian market, and China in particular. According to report, 39 percent of Australian goods were shipped to China in 2019-20, while 27 percent of all goods imported by Australia were from China.
It is critical that Canberra see the forest for the trees, and reconsider its national policy as an Asian-Pacific Nation.
Pulling a publicity stunt and playing the victim when it comes to interactions with China, won’t help amend the relationship and certainly won’t help struggling Australian families and businesses. Canberra should consider good-willed and genuine moves to help rebuild mutual trust which will benefit both countries and peoples.