Australia needs to keep its focus on expanding its China trade ties

The success of Australian exports to China has been noticed by other countries keen to build their own trade links.

This week’s visit to Beijing by Britain’s new Foreign Secretary, Jeremy Hunt, is a reminder to Aus­tralia of the intense competition for the Chinese trade dollar in a world of changing alliances.

In his first major visit since taking the role on July 9 after the resignation of the outspoken Boris Johnson, Hunt’s visit for the ninth China-UK strategic dialogue has included discussion on the potential signing of a free-trade deal following next year’s Brexit.

While Australia’s trade with China is still largely dominated by our resources — particularly iron ore, which makes up $44 billion of our $82bn in exports to China and is not something Britain could supply — Hunt’s visit to China so early in his tenure is a sign of an evolving new world trade order.

In a post-Brexit world, Britain will be looking for more active trade with non-European countries, including Australia. And it will also have to emerge as a more aggressive player in other trade markets such as China.

At the same time, the US-China trade war also has the ­potential to see a realignment of trading patterns.

China itself is now more interested in stepping up its trade with Europe as well as ASEAN and ­Africa, where President Xi Jinping has visited this week.

Australia signed its free-trade agreement with China in June 2015, but the agreement is taking time to implement.

The future for Australian trade with China will be in expanding ties from traditional resources to more food, goods and services, which moves us into areas where we compete with a broader range of developed countries.

Dairy products, including ­infant formula, are a growing area of Australian exports to China but Australian products face competition from New Zealand and ­Europe.

The recent concern has been whether tensions in the Australian political relationship with China could affect trade — ­potentially in areas from student education to beef and citrus products to wine and other services.

The US, which is still one of China’s major export markets, may be able to afford a trade war with China but, as a small player, Australia is always going to have to work harder for its ­trading ­connections. Iron ore aside, many of the products China buys from Australia can be ­sourced elsewhere.

Interestingly, China is not taking the bait of responding to Don­ald Trump’s populist taunts with its own rhetoric, preferring to move through official channels such as the World Trade Organisation’s complaints process while still holding out a public olive branch for the issues to be solved by negotiation rather than an ­exchange of threats.

Chinese Foreign Minister Wang Yi was at pains to say the door remained open on China’s part for talks to resolve the trade frictions, arguing that any disputes should be handled within the rules.

China blames the US for the trade war, with Wang this week describing Trump’s moves as “typical unilateralism and economic hegemony that cannot be accepted by any sovereign independent country”.

In short, watch this space. That is, just because China has not ­responded with quite the same bellicosity that the world is seeing from Washington doesn’t mean it won’t find its own weapons to use in the battle.

Australia’s Agriculture Minister, David Littleproud, signalled his determination to boost Australia’s farm exports to China in ­inter­views at the G20 meeting of agricultural ministers in Buenos Aires at the weekend.

He said he was planning to fly to China later this year to put Australia’s case for more beef sales.

Beef farmers and citrus growers have expressed concern to the Turnbull government about the potential for their sales to China being hit by the fallout from political tensions.

Following the weekend by-elections, the Turnbull government will need to be seen to be doing more for the interests of its natural farming support base.

Australia has the potential to benefit from Trump’s trade war with China, particularly in agricultural areas. Estimates are that US farmers could take a hit of as much as $US11bn ($14.8bn) as a result of Chinese retaliation against the first round of US tariffs. The situation has already prompted Trump to promise to compensate farmers, but trade wars have the potential for changes in world agricultural markets.

But better trade relationships, including realising the potential of what was a groundbreaking FTA with China, require continuing dialogue and interrelationships.

The hopes are that Australian Foreign Minister Julie Bishop will visit China this year for the annual high-level meeting of ministers that is supposed to be part of Australia’s relationship with China.

Regardless of whether she chooses to make the trip or not, the fact is that many of her peers from around the world will be doing so to further their countries’ domestic interests.