China-Australia trade conflict is not all China’s doing

Jan 22, 2021

For the past nine months China has blocked some Australian exports, including coal, cotton, lobsters and timber, while also levying anti-dumping duties on Australian wine and barley. Post Covid, it will be hard for Australia to grow quickly without China’s market, capital, people exchange and know-how.  Finding a détente is essential.

However, Australia targeted China before it targeted us. After signing a free trade and investment agreement with China in 2015, we:

  1. Blocked more than 100 Chinese imports by using anti-dumping provisions that the Productivity Commission found were inappropriate under WTO rules
  2. Led the charge globally to ban Huawei from the 5G network
  3. Officially condemned human rights violations in China without shaming neighbouring countries (e.g. India, Indonesia, Malaysia, Vietnam, Cambodia, Pakistan, Myanmar and so on) for their transgressions or taking moral responsibility for our own Pacific Solution for refugees.
  4. Condemned China for breaching international law by seizing a disputed coral atoll in the South China Sea while ignoring Trump tearing up international agreements such as the Paris Climate Change Accord, NAFTA, the Trans-Pacific Partnership Agreement, the Iran Nuclear Treaty and the Medium Range Missile Treaty
  5. Banned China, but not other nations, from promoting its interests and influence in Australia
  6. Publicly requested the World Health Organisation to investigate the origins of Covid-19 after talking to the Trump administration, but did not give prior notice to, let alone have any dialogue with, China
  7. Have now banned virtually any investment from China or any bilateral cooperation between state governments and universities and their counterparts in China.

China is as a result accusing Australia of singling it out for special discrimination and has designated us a “hostile supplier”. I think it has a point.

We could find ourselves isolated as other countries continue to not only co-exist with but forge closer ties with China. America made China buy more agricultural exports from it. The EU and China have now concluded a “Comprehensive” Agreement on Investment.

And last November, 15 Asia-Pacific nations (including Australia and China) signed the Regional Comprehensive Economic Partnership (RCEP) Agreement to eliminate about 90% of tariffs on inter-regional trade and establish common rules for e-commerce, trade and intellectual property. Following the agreement, Japan and China agreed to work together to uphold and strengthen rules-based multilateral trade and to hold talks with South Korea on a three-way trade deal.

As former trade minister Andrew Robb has highlighted, China accounted for two-thirds of the world’s GDP growth in the past 15 years. Diversifying exports to other markets that cannot match that performance won’t be a substitute.

Unlike most OECD countries, Australia’s resource-rich economy complements, rather than competes with, China’s manufacturing intensive one.

But with media hysteria and megaphone diplomacy, it will be hard to repair the damage to our bilateral relations. It will also be hard for Australia to grow quickly after Covid-19 without China’s market, capital, people exchange and know-how.  Finding a détente is essential.

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