[ad_1]
SYDNEY: When Canberra called for an independent international investigation into COVID-19 in April, Beijing implemented trade restriction measures against Australian beef and barley the following month.
And so, when the Australian government responded firmly to China by imposing a sweeping national security law on Hong Kong in late June, Andrew Tillett and Mike Smith of the Australian Financial Review wrote that “the government [was] preparing privately for a commercial reaction as punishment. “
Sure enough, what followed was an anti-dumping investigation into Australian wine, the suspension of the certification of another meat processor to supply the Chinese market, and barley exports from a major Perth-based grain company banned on food safety grounds. .
READ: Comment: Why China is turning sour on Australian wines
READ: Comment: Can China produce grape wine as fine as the French?
A PREVIOUS TRADE WAR?
Trade Minister Simon Birmingham says “Australia is certainly not engaging in any kind of trade war [with China]”. Jeff Wilson of the Perth US-Asia Center agreed to the extent that it was more of a one-way “business attack”.
However, Weihuan Zhou of the University of New South Wales also observes: “Australia itself has been one of the most frequent users of anti-dumping measures, particularly against China.”
And after watching Treasurer Josh Frydenberg block the sale of a dairy and beverage maker from a Japanese owner to a Chinese one last month, despite the deal having the approval of the Foreign Investment Review Board and the Commission. Competition and Consumers of Australia, the Australian National University Jane Golley assessed: “We are on the brink of a trade and investment war, if we are not already in one.”
BUT TRADE IS GROWING
While the current situation is dire, there are still some data points to suggest that all is not lost.
The background is a deteriorating political relationship since at least 2017. However, despite that, two-way trade has continued to grow.
Officials downplayed fears that Australia was heading into a trade war with China, its biggest barley export market. (File photo: AFP / Loic Venance)
In 2017, Australia’s exports to China amounted to $ 116 billion, representing 30% of the total. By 2019, they had reached $ 169.1 billion, a 34.3% share.
And while this year’s headlines have focused on cases that increasingly appear as Chinese trade punishment, in the first seven months of 2020, the total value of Australia’s goods exports to China has remained stable over the same period. from the previous year. This is during a period when much of the world economy has been in deep recession.
And while this year’s headlines have focused on cases that increasingly appear as Chinese trade punishment, in the first seven months of 2020, the total value of Australia’s goods exports to China has remained stable over the same period. from the previous year.
This is during a period when much of the world economy has been in deep recession.
READ: Comment: Oil is set for a long, rocky road to recovery
LISTEN: Recovery, restructuring and possibly rebound? Prospects for Singapore’s economy
About 20 more can also sell the frozen product, which accounts for about 85 percent of all Australian beef exports to China by volume.
The history of barley is different because prohibitive tariffs put an end to the trade.
But these measures followed an 18-month Chinese anti-dumping investigation that gave Australian grain producers the opportunity to switch to other crops and seek alternative markets. Many did just that.
SOME RESTRICTIONS ARE NEEDED EVEN WHILE THROWING A TANTRUM
Of course, China is not exercising restraint out of benevolence. Trade is, by definition, a win-win exchange.
So stopping trade means China loses too. Beijing could remove all Australian meat processors from the list. But where would Chinese consumers get their high-quality meat protein?
The Australian flag flies in front of the Great Hall of the People during a welcoming ceremony. (Photo: REUTERS / Jason Lee)
Australian producers are not always without market power either. In recent months, China has slipped to become Australia’s fourth-largest beef market, with the United States, Japan and Korea overtaking it to consume the rest.
Perhaps Beijing’s calculations are even simpler: he knows deep down that business tantrums won’t work, so what’s the use of trying too hard?
The fact is that resisting aggressive Chinese movements is a domestic political winner for the Scott Morrison government, and today even the voices of stakeholder groups urging restraint in Australian government policies, such as the corporate sector, they have become calmer.
READ: Comment: China is preparing for more heated relations with the US.
READ: Comment: Zoom’s diplomacy has limits in Asia
CHINA’S ACTIONS DAMAGE ITS REPUTATION
China’s shares to date are also being broadcast around the world, casting significant doubts globally about its reputation as a reliable, rule-compliant trading partner.
In July, US Secretary of State Mike Pompeo was pleased to state that “The United States commends the Morrison government for upholding democratic values and the rule of law, despite intense, continuous, and coercive pressure from the Party. Chinese Communist to bow to the wishes “.
US Secretary of State Mike Pompeo said the measures imposed on Chinese diplomats were reciprocal for the long-standing restrictions placed on Washington envoys. (Photo: AFP / NICHOLAS KAMM)
None of this suggests that Australia can afford to be complacent or arrogant. The costs of business interruptions imposed by China are real, especially for individual Australian companies and specific regions, even if they are not as large as commonly imagined.
“Own goals” should be avoided. There is a difference between making thoughtful statements that defend Australian interests and megaphone diplomacy.
Last week, former Foreign Minister Julie Bishop said: “In my experience, it is possible to have strong private discussions with Chinese officials on all aspects of the relationship … They react poorly when such discussions are in the public domain, particularly if such matters are in the public domain. ” they weren’t raised in trust first. “
The ability to reduce escalation remains within the capabilities of both Canberra and Beijing, and once again allows Australian and Chinese businesses and households to move forward with the commitment both parties agree to is of mutual benefit.
James Laurenceson is Director and Professor at the Institute of Australia-China Relations (UTS) at the University of Technology, Sydney. This comment first appeared on the Lowy Institute’s The Interpreter blog.
