The cooling of our economic relationship with China appears to be getting even colder.
After months of diplomatic silence, frozen barley exports, and barriers to Australian beef and wine, there are new reports that Australian coal could be the next target of the Chinese Communist Party.
It’s export revenue Australia can ill afford to lose but experts are confidant that other markets will emerge to pick up any Chinese demand drop.
However, this latest possible trade stoush only reinforces how vulnerable our economy is to the whims of the Chinese Communist government.
China is our largest export market, taking around a third of Australia's exports by value. That includes $80 billion in iron ore, $14 billion in coal, $16 billion in natural gas and nearly $3 billion in beef.
All up, China accounts for around 7% of our Gross Domestic Product and is the lifeline for 12000 Australian businesses – big and small – covering almost every aspect of Australian primary production.
Our reliance on one of the worlds fastest growing economies is a huge opportunity but is also a potential weakness. While we can tailor our trade to benefit from this growing market, being over reliant is fraught with economic peril.
As my father told me, if you have a single customer for your business then that customer effectively owns your business.
We aren’t in that position yet, but we can’t underestimate how exposed we currently are.
If the Chinese government decides to turn off the Australian export tap, the long term shock to our economy will make Coronavirus shutdowns look like a walk in the park.
Just how we handle the fractious relationship with China will be critical to our future.
Yes, we know they don’t play fair. We know they try to bully and buy what they want whenever they want it. We know they probe our defences and try to influence our domestic affairs.
But as long as we know these things, we can prepare for them and take preventative measures.
The challenge is how to do that without jeapordising our business relationship.
Managing the Sino Australian nexus doesn’t mean we should surrender our sovereignty or ignore some of the actions of the CCP. We must always act in our national interest and never, never succumb to external pressure to do otherwise.
That will require some nimble diplomatic footwork but while there are reports that our trade minister – Simon Birmingham – can’t even get his Chinese equivalent on the phone, there clearly needs to be a change in tune.
Cory Bernardi is the author of seven books and has been a member of the Australian rowing team, a publican, an investment portfolio manager and spent nearly 14 years as an Australian Senator.
The Prime Minister has a delicate balancing act ahead of him. He needs to muscle up to China while re-establishing important trade markets for our products.
