Australia- China relations have long been marked by fundamental tension. Economically, the two sides have been increasingly intertwined, with Australia providing many of the commodities on which China’s industry relies. From 2011 to 2021, Australia’s exports to China have been constantly rising, despite the Covid-19 pandemic & trade tensions developing between them in 2020. In 2021 (till Sep data), Australia shipped goods worth US$ 94.8 billion to China.
China is Australia’s largest trading partner in terms of both exports and imports. 25% of Australia’s manufactured imports come from China; 13% of its exports are thermal coal to China. The ongoing trade relations between Australia and China became tougher in 2020, when the Australian government led an international call for an independent inquiry into the still-murky origins of Covid-19 in Wuhan, China. In response to this tussle, China banned coal imports from Australia.
Australia’s Exports to China Jumped in 2021
Australia’s exports to China jumped to US$ 90.5 billion in 2020 and US$ 94.8 billion in 2021 (till Sep data), despite tussle between the countries from the last two years. Below given chart shows dollar amount of goods exported by Australia to China from 2011 to 2021.
|Year||Value US$ Billion|
|2021 (Till Sep)||94.8|
Iron Ore Driving Export Growth
Around half of Australia’s exports to China is iron ore, which fuels China’s insatiable need for steel to fuel its construction boom. The rest is mainly coal, gas, and agricultural products. Since 2016, Australia’s iron ore exports to China have been rising consistently and reached to US$ 78.9 billion in 2021 (till Sep data).
|Year||Value US$ Billion|
|2021 (Till Sep)||78.9|
Australia’s Tensions with China
It was another tumultuous year for Australia-China relations in 2021, continuing a trend from 2020.
- The year began with a World Health Organization (WHO) investigation into the origins of Covid-19, with a delegation sent to Wuhan. Australia was also among countries who want WTO to investigate the origin of coronavirus pandemic from China.
- Australia went to the WTO over Chinese tariffs on Australian wine, only for China to lodge its own complaint with the WTO days later.
- The ongoing trade tussle has impacted not only wine, but also Australian barley, lobster, beef and coal exports.
- China stopped buying coal from Australia in 2020, after Canberra backed a call for an international inquiry on how Beijing handled the Covid-19 outbreak.
- Furthermore, China applied massive anti-dumping duties on Australian barley.
- Beef was next, with several Australian producers losing their export licenses.
- More tariffs from China were applied to wine, while customs bans were slapped on wheat, lobsters, wool, copper, sugar, timber, and table grapes.
After China’s ban on some products imported from Australia, many Australian industries found alternatives to export their products. Barley was redirected to Saudi Arabia and Southeast Asia. Copper to Europe and Japan, and cotton to Bangladesh and Vietnam. However, Australian timber and wine, mainly produced specifically for the Chinese market, have struggled to find alternative destinations.
Australia has shown the world it can say no to China and still prosper, despite trade sanctions and a forced economic decoupling. It may not be long until more countries start to follow.