How China has eclipsed Australia

THIS is the graph that shows how China has managed to dominate Australia for the past 25 years.

CONFLICT over the South China Sea has not stopped China from achieving a dramatic increase in trade connections with its neighbours — leaving Australia in its dust.

Dr Sandra Seno-Alday of the University of Sydney has analysed trade connections between South East Asian countries in the past 25 years and found China had grown its trade links by close to 350 per cent.

In 2014, China was the number one connected country in the region with more than 40,000 links to neighbouring countries. In contrast, Australia was seventh and only increased by 60 per cent between 1990 and 2014.

The second most connected country, Thailand, grew by 120 per cent.

“China has dominated the trade network since the early 1990s and their dominance has been consistent since then,” Dr Seno-Alday said.

“Data has shown the position of Australia has diminished over time, it was stronger in the 1990s compared to what it is today.”

Dr Seno-Alday, who is an executive of the Sydney South East Asia Centre and is due to present her research at the ASEAN Forum 2016 tonight, said this may not be because of any particular weakness in Australia but could be due to the strengthening of other countries.

“Both China and other ASEAN countries have grown quite significantly,” she said.

Her research identifies imports and exports between countries but does not include services, which may be one reason why a service-orientated country like Australia did not feature as prominently.

For each product that is sold or bought between countries, Dr Seno-Alday draws a line between the two countries. “China has the most number of connections,” she said. Compared to China’s 40,000 links in the region, Australia has about 34,000.

Dr Seno-Alday said Thailand was a quiet achiever that had grown slowly and consistently to rise to number two on the list with almost 40,000 connections. Next was Singapore with 39,000 links, Malaysia with 36,000, South Korea with 35,000, Japan on 35,000 and then Australia.

She said the research highlighted the need for Australia to engage more with other countries in the region, which would lessen the dominance of China.

“I think the message is we need to engage more,” she said. “We need to reach out more so that there’s less dominance of one country.

“From a network perspective, if you have got one single country that’s dominant, you end up with a vulnerable network. If one country collapses, it brings the network down with it.

“Greater engagement in the region is going to result in a more robust network that’s less susceptible to disruption.”

China (centre, marked in red) dominates trade links with South East Asia, with Australia on the outer (also in red) and New Zealand even less connected. Source: Dr Sandra Seno-Alday of the Sydney Southeast Asia Centre.

Surveys of Australian companies have identified that one of the biggest barriers to doing business overseas is having contacts and a network in the country, she said.

“I see there’s a big role for business councils to play in helping Australian businesses establish business networks on the ground,” she said.

There could also be a role for free trade agreements or bilateral agreements. But when asked whether Australia should join ASEAN (a network of 10 countries in the region), Dr Seno-Alday said she wasn’t sure as she thought Australia could benefit from ASEAN without actually joining.

She said ASEAN was already looking at harmonising policy and regulations across industries and this would help Australian businesses looking to do business in ASEAN counties.

Bilateral business councils, such as those already existing in Vietnam and the Philippines, could help to open doors on the ground.

“The opportunities are just so great — we have to seize the day and get out there.”