CANBERRA: Australia is in a very awkward position between the US and China,” said Roland Rajah at Sydney-based think tank the Lowy Institute. Rajah previously worked at the Asian Development Bank and Australia’s central bank. “Risks of escalating economic tensions between these two is a big concern.
China buys 35 percent of Australian exports, equivalent to about 8 percent of gross domestic product, and dominates iron ore shipments and education. Already, in response to the Turnbull government’s announcement of measures to try to thwart Chinese political influence, Beijing is reportedly seeking to discourage students from studying Down Under by warning about safety risks.
“As a trading nation Australia has a lot to lose from an all out trade war,” said Andrew Charlton, director of consultancy AlphaBeta in Sydney and one-time economic adviser to former Prime Minister Kevin Rudd. “Whether we are exempted from specific protections or not, the deterioration of the global open trading system will harm our future.”
US President Donald Trump overnight instructed his trade representative to levy tariffs on at least US$50 billion of Chinese imports, citing allegations the nation violates US intellectual property. Hours later, China announced reciprocal measures on US$3 billion of imports from the US, including products from steel to pork. It said it will also pursue legal action against the US at the World Trade Organization.
Earlier, China’s ambassador to Washington Cui Tiankai said accusations of intellectual property violations were “groundless.” Cui warned “if people want to play tough, we will play tough with them and see who will last longer.”
For Australia, the economic relationship is not just about shipping metals. While China’s thirst for these hasn’t waned, it’s now complemented by demand for everything from tourism to wine and vitamins. Indeed, 8 percent of China’s imports from Australia were consumer goods in 2016, the most recent full year when data is available, compared with just 2 percent in 2013, while the share of minerals has fallen to 56 percent from 62 percent over the period.
