

Will the Five Eyes stare down Chinas economic coercion? So far their self interest looks to be winning out.
April 18, 2021
_For at least some products , Australia may not so much be left alone on the playing field as substituted off and only able to watch from the sidelines.
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Trade figures suggest promises to have Australias back are yet to be matched by economic solidarity. Next month brings the inauspicious one-yearanniversary of China ramping up a campaign of trade punishment against Australia. Wine, barley, beef, lobster and coal have all been targeted. And theres no end in sight.
Weary Australian government ministers could be forgiven for taking solace in a series of supportive statements from the Biden administration, as well as by senior politicians and officials in other liberal democratic countries. Last month, Trade Minister Dan Tehansaid, I think all Australians should be reassured by the fact that the Americans have come out and said that theyve got our back, and they wont leave us alone on the playing field.
Prime Minister Scott Morrisonfollowedup by expressing appreciation for the great support weve had from liberal democracies around the world, none less so than the United States. The government has also taken topromoting the economic connections among the intelligence-sharing partnership of the so-called Five Eyes Australia, Canada,New Zealand,the United Kingdom and the United States.
Australia is providing an important international community service. Plenty of capitals are keen to take lessons from Canberras experience about how to manage their own relations with Beijing and what a more powerful and nationalistic China might mean for their interests.
But in terms of having Australias back, what support, precisely, is being offered to Australia? To date at least, its not economic solidarity.
Of the $20 billion or so annual fall in Australian exports to Chinacaused by trade disruptions, coal accounts for more than half. Using a rolling, quarterly window to smooth monthly volatility, statistics from Chinas General Administration of Customs indicate that as of September 2020 Australia held a 42.2% share of Chinas imported coal market.
At the same time as undertaking a clear-eyed reappraisal of the China relationship, Australias predicament wont be eased by extending a doe-eyed gaze elsewhere.
The following month, Chinese utility companies and steel mills weregivenverbal instructions to avoid the Australian product. Australias share fell to zero in the three months to February 2021.
In contrast, the share of other Five Eyes countries rose from 2.7% to 6.1%.
The same data source shows Chinas massive imported food and beverages market was worth $US123 billion in 2019. In April 2020, Australia held a 6.3% share. The next month, four Australian abattoirs had their certification to supply the Chinese market removed and this was followed by tariffs on barley and disruptions affecting lobsters and more. Australias share fell to 3.6% by February 2021.
Meanwhile, the share of other Five Eyes countries went from 25.5% to 39.5%.
To be sure, a good chunk of this jump stemmed from US sales of soybeans and corn, products which Australia does not sell to China in volume. But a report by University of Adelaide researchers in Februaryfoundthat the Phase One US-China trade deal struck in January 2020 had possible implications for two-thirds of Chinas goods imports from Australia other than iron ore.
The US is aware of Australian fears about it cutting trade deals with China on the side. In June last year, thentrade minister Simon Birminghamsaidhe was watching US-China trade flows carefully and closely.
This is also whycommentslast month from Kurt Campbell, Bidens Indo-Pacific Tsar, contending that the US is not prepared to improve relations in a bilateral and separate context at the same time that a close and dear ally is being subjected to a form of economic coercion were so appreciated.
Yet Bidens trade chief Katherine Tai has alsoinsistedthat China needs to deliver on the bilateral promises it made in the January 2020 agreement, including those to increase purchases of US agricultural products this year.
For at least some products then, Australia may not so much be left alone on the playing field as substituted off and only able to watch from the sidelines.
When China closed the door to Australian wine by imposing prohibitive tariffs in November, the Trump administration, including Secretary of StateMike Pompeoand othermembersof the Inter-Parliamentary Committee on China, with the bulk of its members from Five Eyes countries, took to social media,urgingtheir compatriots to up their purchases and blunt the impact.
Alas, while thevalueof Australian alcoholic beverages exports almost exclusively wine to China fell by 98% between October 2020 and February 2021, sales to the US and other Five Eyes countries didnt compensate. In fact, these also fell by 25%.
Over time this will likely grow as Australian winemakers put more resources into developing the US and UK markets. Perhaps Canada, too, after the Australian government successfully tookactionagainst Ottawa at the World Trade Organisation to prise open its market.
In contrast, sympathetic voices in Washington, London, Ottawa and Wellington and social media campaigns touting what the Barossa Valley and Margaret River vintages have to offer are unlikely to make much of a difference.
Chinas trade belligerence has predictably prompted a reassessment of its reliability as a trade partner in Canberra, amongst Australias business sector and in plenty of other countries watching on. For this, Beijing only has itself to blame.
And even support from Australias security allies, friends and partners that is, limited to rhetoric, are welcome. But at the same time as undertaking a clear-eyed reappraisal of the China relationship, Australias predicament wont be eased by extending a doe-eyed gaze elsewhere. Practical support may eventually materialise. But until then, it needs to be recognised that it is local winemakers and lobster fishers who are picking up the tab.
This article has been republished fromThe Interpreter15 April 2021. Click here to read the original article.

James Laurenceson
James Laurenceson is Director of the Australia-China Relations Institute with the University of Technology, Sydney.