Australia needs to ‘try harder’ on trade front amid tensions with China: expert

Australia needs to “double down” on diversifying into markets other than China and pick its battles wisely, says an expert in international relations.

Australia needs to “double down” on diversifying into markets other than China and pick its battles wisely, says an expert in international relations.

The comments come after an opinion piece published by Communist Party mouthpiece the Global Times, claimed it was an exaggeration to suggest ties between the two countries have entered “uncharted territory”.

Peter Cai, an expert from the Australia-based think tank Lowy Institute, told the Nine Network on the weekend  China’s previous trade disputes with other countries were “limited in duration and scope”.

However he declared Australia had entered “uncharted territory” with China.

“We don‘t know if this sanction list will grow and more importantly, the duration of this. There’s no indication either side will back down,” Mr Cai said.

“I think we’re really in uncharted territory. We’ve never seen anything like this.”

Xu Shanpin of the Center for Australian Studies at the China University of Mining and Technology, wrote in the Global Times on Monday the deteriorating ties between the countries won’t change anytime soon due to Australia’s “misjudgment of China’s strategic intentions and misunderstanding of China.”

But it is “exaggerated” to hint the severity of the row may be worse than that between China and the US.

“One should therefore not be too pessimistic about China-Australia relations,” he said.

But Australian National University Professor of International Security and Intelligence Studies, John Blaxland, said he agreed it was “fair” to say the relationship had reached uncharted territory.

But he noted echoes of challenges Australia has faced previously, particularly in Britain during the European Economic Community, which negatively affected trade relations significantly and forced Australia to diversify its markets.

“My sense is that China is seeking to make an example of Australia because it wishes to undermine the security links to the United States and send a message not only to Australian traders but globally that they have to do it increasingly on Chinese terms and those terms include deferential restrained political commentary on domestic Chinese matters,” Professor Blaxland told NCA NewsWire on Tuesday.

“I don’t think either Scott Morrison or Anthony Albanese are in a position to concede on that.”

ANU Professor John Blaxland says Australia needs to look to new markets.

It comes after the trade superpower rolled out harsh restrictions on many Australian sectors, including wine, timber, barley and lobsters in recent weeks.

Aussie coal has also been unofficially banned since October, with steel mills and power companies apparently told to steer clear.

Ships carrying Australian coal are also stranded off China’s coast, unable to unload hundreds of millions worth of Australian goods.

Professor Blaxland does not believe relations will significantly worsen although he thinks China will try and move from using Australian iron ore.

But in cutting off sales from Australia and buying elsewhere, this too opens up other export opportunities for Australia, he said.

He added China seemed to be operating as if the world is a command economy - where the where the government, rather than the free market, determines what goods should be produced, how much and the price - “but the world isn’t”.

“The world is actually a market where there is supply and demand, where there is ebbs and flows and so Australia can sell its coal somewhere else, it can sell iron ore elsewhere,” Professor Blaxland said.

“The bottom line is there are finite resources and when there are other mining fields opened up that will change the dynamics, but that’s not because of politics, that’s because of market dynamics.

“It’s important to remember today they’ve never traded with us because they like our liberal western democracy.

“They’ve only ever done so because it’s a good deal.”

Australian coal producers have been met with challenges from China. Photo: AAP image, John Gass

In order to improve relations, Australia needed to avoid “unduly poking them in the eye”, Professor Blaxland said.

“We need to be circumspect much like our neighbours are circumspect.

“Our neighbours don‘t go criticising China very vocally.

“I think here the model that is probably closest for us to follow is Japan.

“Because Japan, like Australia, trades extensively with China, is a close US ally and doesn’t want those geo-strategic dynamics to alter too much in China’s favour. Yet Japan manages to engage reasonably constructively and maintain open doors.”

Despite this, China has been assertive and aggressive towards Japan over the disputed Senkaku/ Diaoyu islands in the East China Sea - so Australia is not the only country being picked on by China, he says.

Instead, Australia can show it target the many other opportunities in markets, such as South East Asia, South Asia, Africa and Europe.

“We need to double down on diversification,” Professor Blaxland said.

“We have by and large found it easy to trade with China and so haven’t tried that hard elsewhere.

“We’re now realising we need to try harder elsewhere: Indonesia, Malaysia, Thailand, Vietnam, India.

“All these countries we’ve had a trading licence with, but they haven’t been top tier relationships because we’ve been caught in the headlights, if you like, of the Chinese market.

“That’s the new normal I think - we’re going to have to work for it. There’s more elbow grease involved.

“We’re also going to have to watch our Ps and Qs and choose our battles wisely and engage in a manner circumspect, echoing those of other close allies.”