ANTHONY PUN. Australia at the crossroads of economic survival.May 8, 2019
Recent articles in the South China Morning Post and Pearls and Irritations are wake-up calls for Australians in the pilot seat for the next five years driving Australian foreign relations and trade. Some pundits are pessimistic about a quick turn-around for Australia to mend its Australia-China friendship as events have gone past the point of no return, whilst others like me would still have an optimistic outlook for a return to normal foreign and trade relations with China if a sincere and genuine approach to repairing relations were put into place. If nothing is done, our economy may take a dive towards recession.
The three recent articles on the effect of Australia involvement in the US-China trade war should be a big wake up call: Cavan Hogue: The panda versus the grizzly bear (P and I, 1 May 2019); Mike Scrafton: China in Australia’s defence and strategic policy (P and I, 1 May 2019); and Bob Carr: Australia could be the big loser in a US-China trade deal, not that Donald Trump seems to care(South China Morning Post, 11 April 2019, 30 April 2019).
If the words of these articles were not enough, then a supplement of figures might be loud enough to be like the crowing of the cock in the wee hours of the morning.
According to an ABC on-line report on 15 Jan2019, Australian exports to China were worth $123.3 billion which is 30.6% of its total exports (figures from DFAT) and they include the following 15 Jan 2019:
- Australia’s biggest exports are iron ore and coal, worth $120b (or 30% of goods sold overseas)
- Education services, which rake in $32.4 billion (or 8 % of the nation’s exports) from international students.
- DFAT figures revealed that Chinese tourists spent $11.3b.
- A separate report showed export revenue for China (2017/8) was $2,976m for Wool and $1,002m for Beef.
In 2017-18, China was by far Australia’s largest trading partner, contributing $194.6 billion worth of imports and exports. This was more than the combined value of trade with Japan and the United States ($147.8 billion).
As a result of the US-China trade war, China is heading for a trade recession as exports crashed 20% and that is bad news for Australia (8 Mar 2019) . The report highlighted the following:
- China’s trade surplus with the US halved as tougher tariffs took their toll
- Weak imports point to a domestic economy cooling rapidly
- China’s appetite for iron ore hit a 10 month low.
According to Bob Carr, “Australia sticking its neck out for the US on the issue of Chinese telecoms giant Huawei will not stop America from striking a trade deal with China that could result in Australian exports suffering” (SCMP 11 April 2019).
When China starts to cut into their exports, what will happen to our export market to China? How would that affect our GDP?
The government is projecting a surplus of $7.1bn in 2019-20, and surpluses are projected into the future. Frydenberg said those surpluses would build towards 1% of GDP within a decade “as we climb the mountain and reach our goal of eliminating Commonwealth net debt by 2030 or sooner”.
But the Treasurer also warned there were “genuine and clear risks emerging both at home and abroad”. He nominated global trade tensions, a slowing in the Chinese economy and a cooling in the housing market as dangers to the economic outlook.
Will a drop in GDP affect social welfare payments such as pensions, Medicare and other social welfare benefits that currently enjoyed by Australians as a safety net?
Multilateral geopolitical relations may be simplified to a trilateral relationship with Friends, Australia, US and China. A true friend does not impose unnecessary hardship or difficulties on another. Although it is important to assist a Friend in real need, in the circumstances where the need is not morally or ethically justified, it would be difficult. Helping a Friend by offending another Friend, is not a wise move. A better course of action would to retain both Friends by offering to mediate and conciliate between the two antagonists.
If a Friend insist on being on his side for selfish reasons, then you are being used. “A true friend freely, advises justly, assists readily, adventures boldly, takes all patiently, defends courageously, and continues a friend unchangeably” (William Penn).
However, America First policy does not necessarily have Australia’s interest in mind. It is still America First, everybody else second.
Putting this philosophy into the context of the US-China hegemony, the US is leaning on Australia in an unreasonable manner which could affect our economy and livelihood. Is that an act of friendship? China is leaning on Australia, threatening to cut off our exports – is that an act of friendship? Both consequences are a result of our choice and it becomes a loose-loose result for Australia.
Mediating for the two giants would be a win-win situation for all three parties. Australia does have a choice.
Dr Anthony Pun, OAM, is the current National President of the \Chinese Community Council of Australia Inc.