Australia urged to find new trading markets in face of China’s aggressive behaviour

One of the world's most powerful international organisations has issued a grim warning to Australia about relying on trade with China.

Australia has been issued a grave warning about the true economic impacts of China’s volatile behaviour by one of the most powerful international organisations in the world.

The Organisation for Economic Co-operation and Development released a report on Wednesday urging the Australian government to pivot away from our largest trading partner and find new countries to ramp up trade with.

“Over the past two decades, the share of Australia’s merchandise exports destined for China has increased from 10 per cent to around 40 per cent and now surpasses Australia’s total merchandise exports to all OECD countries combined,” the report said.

“The increased concentration of export flows makes Australia more vulnerable to a future shock in the Chinese economy or import restrictions being imposed on additional commodities, such as iron ore.”

Over the past two decades, the share of Australia’s merchandise exports destined for China has increased from 10 per cent to around 40 per cent. Picture: OECD.

The OECD stressed that while a strengthened trade relationship with China had brought benefits for Australian businesses, households and government incomes over recent years, relying on this relationship into the future is a dangerous move.

China has already weaponised trade to try to coerce Australia to alter its strategic behaviour, imposing destructively high tariffs on key Aussie exports such as wine, beef and barley.

The OECD warned that if this spread to other important industries, the impacts could be devastating for Australia’s economic future.

China has attempted to weaponised trade against Australia, imposing tariffs of up to 218 per cent on Aussie wine exports in recent months. Picture: Nicolas Asfouri / AFP

“The further imposition of trade restrictions by China, in areas such as iron ore and education, would substantially dent the pace of economic recovery,” the report said.

“(Australia should) explore the potential for trade diversion to other export markets and provide targeted support to the impacted industries as they transition to new markets.”

While the report noted that resolving trade tensions with China could potentially boost Australia’s export growth, diplomatic relations with our increasingly volatile neighbour would always have the potential to get even worse.