Australia high on China import list

Australia is poised to overtake the US to become China’s fourth-largest importer, despite years of strained political relations.

ACRI director James Laurenceson. Picture: Hollie Adams

Australia is poised to overtake the US to become China’s fourth-largest importer, despite years of strained political relations and Donald Trump’s claim to have won a trade war against the rising power.

Meanwhile, Taiwan has surged ahead of South Korea in the first eight months of the year to become China’s largest source of imports, revealing the gulf between Beijing’s fiery rhetoric and its economy.

“While political tensions have ratcheted up again, Australia remains China’s fifth-largest import source, just behind the US,” said Sydney-based think tank ACRI’s director James Laurenceson, who compiled the 2020 trade data for The Australian.

“And while the mainland points missiles at Taiwan, it has also been the mainland’s No 1 import source so far in 2020,” Professor Laurenceson said.

Concerns about Australia’s economic relationship with its biggest trading partner heightened as Beijing responded with trade reprisals to the Morrison government’s push for an independent inquiry into the origins of the corona­virus.

A new report by ACRI said it was possible further deterioration of the political relationship between Australia and China would lead to greater economic distancing, “but it would be a mistake for Australia to believe that [China] was already making general moves in that direction,” write its authors, Professor Laurenceson and Thomas Pantle.

Underlining the strategic complications for the rising power, China’s top six importers in 2019 were US allies (South Korea, Japan, Australia and Germany, in first, third, fifth and six places, respectively), the US-backed island of Taiwan (in second place in 2019) and in fourth place the US.

Singapore’s former ambassador-at-large Bilahari Kausikan said there was too much angst in Australia about the “so-called contradiction” between its economic and security interests.

“You are not in a unique position. Almost everybody in the Indo-Pacific … is in the same position to some degree,” said Mr Kausikan, the former secretary of Singapore’s foreign ministry.

“The Chinese are not buying your stuff because you are all very good-looking people.

“They are buying your stuff because they need your stuff — your quality is good, your price is right.

“It’s not a favour they are doing for you.”

Despite apparent economic retaliation on Australian beef, barley and wine, raised prices of iron ore — for which Australia is by far China’s biggest supplier — have kept total import levels near record highs.

In the first eight months of 2020, Australian exports to China declined by only 2.3 per cent compared to the same period last year while Australia’s total exports to the world fell by 11.2 per cent.

Over that period, China imported more than $104bn from Australia — just less than the $108.3bn imported from the US.