Observers could be forgiven for thinking Australia-China trade relations could be in grave danger following recent diplomatic tit-for-tats and the ongoing push for an investigation into the origins and spread of COVID-19.
But while diplomatic and political relations will occasionally be tense, four experts who convened at the University of Sydney’s China Studies Centre recently said they expected Australia’s trade ties with China would remain “strong after the COVID-19 pandemic has passed”.
However, despite this optimistic outlook, the panel of experts agreed that Australia’s bilateral and investment relationship with China needed to broaden.
Head of International Business Australia, Sara Cheng, told the panel that three factors could affect our bilateral business relationship.
“Firstly, how we play with the relationship and how we balance our diplomatic and economic needs," she said.
“Secondly, China’s economic performance will affect our trade with China. China’s economy has been slowing down a little, but if China feels a lot of pressure from a diplomatic and political perspective, it will eventually affect market sentiment and China’s economy.
“And finally, the global market. How are the trade war and the coronavirus affecting the global market? If the global market is not doing well, it will affect the manufacturing sector and consumption in China, and hence affect Australia’s mining resources and consumer goods export to China as well.
“In the short and medium term, we will not find a trade partner as substantial as China.”
Former Australian Ambassador to China, Dr Geoff Raby, said that Australia’s trade relationship with the superpower needed to broaden.
“From a commercial sense, through all the vicissitudes, our exports to China have just grown and grown but they are very narrowly based. Take iron ore out of the equation and they are even more narrowly based,” Raby said.
“I don’t think travel restrictions will be lifted anytime soon and it could even lead into next year. So that’s going to have a very big impact because after iron ore and coal, education is our biggest export to China.”
Hans Hendrischke, Professor of Chinese Business and Management at the University of Sydney, warned that “decoupling” from China was not a feasible option for Australia due to the two countries’ economies being so intimately intertwined.
“China and Australia are economically mutually dependent. China needs iron ore and food from Australia for recovery and rebuilding. Australia on the other hand needs exports,” Hendrischke said.
Hendrischke went on to say that the Australian government was heading in the right direction in its calls to revitalise Australia’s manufacturing and industrial capabilities.
“The way the Australian Government is going is quite positive. The idea of reassuring the Australian manufacturing capacity is something that could create more jobs,” he said.
“It will be in markets where we are competitive, that is largely around health, food, energy and infrastructure. The reason we are competitive in those markets is because we are dealing with China, we have built up capacity to supply the demand in China. Even if we move to stronger manufacturing, we will still have to work with China.
“We will have to reconsider Chinese investment. How do we get Chinese participation and cooperation in tailoring products for the Chinese market?”
Daojiong Zha, Professor of International Political Economy at Peking University, also agreed that Australia needed to invest more in the Chinese market and expected trade between the two countries to bounce back in the third quarter of the year.
“It is sad Australians only talk about Chinese investment into Australia, I never hear people talking about Australian investment in China. If nothing else, by investing in China it gives you a more a direct feel about the changes in the Chinese market. It does not have to always be iron ore, you can find other niches,” Zha said.
“What better way to know about a country’s economy, to predict its future change, than by being on the ground?”
“When we have a recovery, Australia will be a reliable supplier of high-quality ore and other products like food. I think the actual impact of the coronavirus will be very minimal. I would expect Chinese imports of Australian supplies will pick up rather rapidly in the third quarter.”
Despite positive sentiments being shared about Australia and China’s business relations in the future, the panel was not so optimistic about the two countries' political relationship, and all agreed improvement was necessary.
“Our relationship with China has been at the lowest ebb it’s ever been since diplomatic relations were established in 1972. That is a big issue,” Raby said.
Zha said the political relationship between the two countries had been “historically … very asymmetrical” in terms of attention.
“In Australia you have a way higher level of attention on getting your relationship with China right, on our side Australia does not feature high on the priority list of political relationships,” he said.
“Unfortunately, the media not just in Australia but here in China, get into an echo chamber effect of picking up on negativity towards each other.”
Hendrischke believes students and international education were an important link for the two countries, saying the problem the two countries faced was “connectivity”.
“The students are crucial as an asset in our connectivity,” he said.
“But we may not be able to overcome the travel restrictions.”