The trade dispute in China has cost Australia $ 3 billion in lost exports

Photographer: Brendon Thorne / Bloomberg

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Australia’s trade dispute with China cost commodity sales about $ 3 billion last year, and the relatively small impact indicates that the country has little economic need to bow to Beijing’s pressure.

It is the value of Australian exports lost in 2020 compared to the previous year, and it covers goods from copper and coal to wine and crayfish that according to Chinese customs data, is now subject to trade restrictions by Beijing. The impact on some of these industries was devastating as exporters were forced to abandon their largest market and seek customers elsewhere.

At the same time, China’s state-backed infrastructure to save its economy from the pandemic has lifted the amount of iron ore it needs to fuel record steel production. And there Australia is the dominant producer. Purchases by China increased by almost $ 10 billion last year.

The value sent away in commodity supplies to China does not catch up with replacement sales to new markets or shifts in international prices and exchange rates. It is also dwarfed by Australia’s total exports in the first 11 months of last year of $ 257 billion. Meanwhile, China’s total world imports fell by 1.1% in 2020 as the pandemic hit supply chains and pushed demand.

Beijing’s trade revenge has stopped targeting the products that are most important to its own economy – iron ore and liquefied natural gas. They are also Australia’s biggest earners. Australia is the developed economy most dependent on trade with China, and the two completed a free trade agreement in 2015. Relations have deteriorated since 2018, when Canberra barred Huawei Technologies Co. from its 5G network, and went into free fall in 2020 after the government made an independent appeal. investigate the origin of the pandemic.

China has made noises about breaking its dependence on foreign iron ore, but Australian miners are incredibly cost-effective and the government has few alternatives to prevent the cost of its steel industry, the largest in the world, from being reduced. Gas is considered an important bridging fuel for Beijing’s goal of carbon neutrality while weaning itself from coal. China does not produce enough locally, and Australia is also one of the world’s best suppliers.

– With the help of Jasmine Ng, Shuping Niu, Dan Murtaugh and Dennis Ting