China has been a strong economic partner of Australia for decades, predominantly as Australia’s largest export trading partner, with trade totaling $111bn in 2019 (OEC.World 2019). While this sounds positive, this is not indicative of the entire story. While the two countries are close economically, they’ve been growing farther apart diplomatically. Tensions have been heating up as the U.S. and its allies, including Australia, have continually sparred over a variety of issues from territorial claims in the South China Sea, to access for Huawei, and most recently the origins of the Covid-19 outbreaks.

Diplomatic tensions began to escalate as a result of the banning of the Chinese tech giant Huawei’s 5G network in Australia. It’s alleged that the DPRC could request access to Huawei’s networks, causing cyber security concerns, and Australia was one of the first to make these decisions. In addition to the Huawei sensitivity, Australia’s Prime Minister, Scott Morrison was one of the first global leaders to call for an inquiry into the origins of Covid-19 and the Chinese government’s response to the outbreak. Since then a period of silence in diplomatic relations has endured. China responded with a list of 14 demands and imposed trade tariffs on Australian exports to China including Barley, Timber, Wine, and Seafood. This was thought to be a crippling blow to Australia’s economy, however, many industries have been able to find alternative markets, and in some cases ways around those restrictions. Current Iron ore prices are demonstrating that China’s appetite for the Australian commodity is still strong.

The trading relationship between the two countries has been up and down, if this continues, further destabilization of relations may endure. It is important to note that Australia is less important to China on an economic level, meaning that losing Australia as a trading partner would not effectively alter China’s economic growth strategy. It is also worth noting that Australia has close ties to many other countries with strong economies such as Japan and the U.S. The question now is what does the future of Australian and Chinese relations look like? When looking at the current geopolitical landscape it seems that things may get worse before they get better. An opportunity to take pause and release pressure may be the best approach to reopen communications again. 

These thoughts are something Dr. David Brophy is exploring as alternatives for Australia’s approach with China 

#China #Australia #Diplomacy #Business #Trade #Risk #Superpowers

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