Australia-China trade ties set to improve

It is an interesting development that Australia and China are set to improve their trade ties after recent diplomatic standoffs in the wake of COVID-19 and charges of espionage and unfair trade practices. China had imposed trade restrictions which had hit Australian agricultural and mineral exports hard. There has been a brisk to-and-fro between the Australian and Chinese diplomats in recent weeks, and more is in the offing in March, and it is hoped that there will be further relaxation of Chinese restrictions on Australian imports. Australia ships coal, Australian cotton and Australian wine are headed for China and Australian businesses are optimistic about the prospects of increased trade. This shows that whatever the global security rivalries that many of the Western countries have with China on ideological and diplomatic grounds, trade seems to trump many of the other concerns. And the Australian attitude towards improving trade ties with China shows that money speaks louder than ideology.

Australia has been part of two formations, one specifically military, and the other a diplomatic pressure group, with China as the target. The first one is between Australia, the United Kingdom and the United States, with the acronym, AUKUS, where Australia is set to buy nuclear submarines from the United Kingdom. There was much heartburn over the issue in France because Australia was committed to the nuclear submarines from France. China has opposed the move by Australia because it is seen as a direct challenge to Chinese supremacy in Asia-Pacific. But it is clear that Australia is not the only military challenge to China. Japan has recently announced an increase in its defence budget showing that Japan, an old and bitter rival of China before in the 1930s, is against bidding to become a military power in the region. The United States is already seen as a military rival of China where Washington intends to use military force to defend the independence of Taiwan if China were to use force. And there is the second formation called the Quad, comprising the United States, Japan, Australia and India, a ginger group which clearly is a challenge to China in south-east Asia and in the Pacific.

The trade thaw between Australia and China shows that despite the diplomatic and security tensions between China and the countries in the two formations, trade takes precedence. Trade ties between Japan and China, the United States and China, and India and China are thriving despite the political rivalries. The attempt of the QUAD is to provide alternative investment destinations to China, but for the moment China seems to be holding on to its economic advantage as a huge consumer market as can be seen by the eagerness of Australian politicians and businesses to work with China.

Australian Forest Products Association head Victor Violante said that the talks with the Chinese over exports of logs – an Australian$600 million annual trade – will soon witness a resumption of trade. And Grain Trade Australia Chief Executive Pat O’Shannassy said, “People are starting to get on the front foot. Trade is ultimately about relationship and people are getting those relationships in place.” It is not just the Australians who are eager about strengthening trade ties with China. Chinese diplomats in Australia are doing more than their bit to get the trade ties going. Long Dingbin, China’s top diplomat in Western Australia, has apparently hosted a Chinese New Year party, which was attended by more than 350 Australian political and business leaders. But some of the Australian businesses which found new customers during the trade blockage with China do not want to lose the new markets. Said Cattle Australia’s chief executive David Foote that the Australian cattle traders would “want to add China back in but not at the offset of losing their new customers.”