• By The Financial District

Australia Blunts China's Bullying, Shows What Decoupling Should Be

China’s bark is worse than the bite, says Foreign Affairs analyst Jeffrey Wilson, and Australia showed the entire world how to stand up against Beijing with dignity intact despite sanctions, higher tariffs, and threats of trade boycotts.

Photo Insert: Australian Prime Minister Scott Morrison and Chinese Premier Li Keqiang in 2018, during what were friendlier times between the two nations.

“When Australia had the temerity to call for an independent inquiry into the origins of COVID-19 last year, China was incensed. It responded with an unprecedented wave of trade restrictions that froze many categories of Australian exports, rapidly decoupling economic ties. But if Beijing hoped to punish Canberra for its defiance with economic pain—and send a warning to other countries not to oppose China—it has failed on both accounts,” said Wilson, the research director of the Perth US Asia Center.

The impacts on Australia have so far been surprisingly minimal. If this is what decoupling from China looks like, Australia’s resilience suggests the costs are far lower than many have assumed.

That fact will not be lost on other countries that have differences with China. Australia-China relations have long been marked by a fundamental tension.

All the news: Business man in suit and tie smiling and reading a newspaper near the financial district.

Economically, the two sides have been increasingly intertwined, with Australia providing many of the commodities upon which China’s industry relies, Wilson maintained.

But politically, much divides them. Beyond differences on values and human rights, Australia is concerned by China’s increasingly belligerent behavior in the Indo-Pacific. China, meanwhile, bristles at what it believes to be Australia’s anti-China stance.

Government & politics: Politicians, government officials and delegates standing in front of their country flags in a political event in the financial district.

Over the past several decades, the two countries operated under an implicit bargain to shelter their rapidly growing economic ties from any political differences. It worked: From 2009 to 2019, Australian exports to China tripled to 149 billion Australian dollars (around $110 billion) per year.

Around half of that 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, plus substantial Australian earnings from Chinese students and tourists. This bargain held even when relations hit a rough patch—such as in 2009 and 2017—with trade increasing every year.

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