Coronavirus: Cutting reliance on China to hit jobs

Calls for Australia to diversify export markets away from China risk putting Australians out of work, a parliamentary inquiry has been told.

Australia-China Relations Institute head James Laurenceson. Picture: Hollie Adams

Calls for Australia to diversify export markets away from China risk putting Australians out of work and weakening the economy, a parliamentary inquiry has been told.

Pushing back against national security arguments for cutting the nation’s reliance on Chinese markets, the Australia-China Relations Institute told the joint trade and investment committee that the interests of business “are not in contradiction to the national ­interest”.

“Diversifying Australia’s export markets away from China means diversifying towards countries that are not willing to pay as high a price for the goods and services that Australian businesses produce, or that do not want to buy them at all,” ACRI’s James Laurenceson said in the submission.

The committee is examining whether Australia is too reliant on one market for exports in a probe dubbed the “China inquiry” by chairman George Christensen.

The Australian Strategic Policy Institute’s John Coyne told the inquiry that Australia’s economic reliance on China had left the nation “vulnerable to Chinese economic policy manipulation”.

“Australia has sleepwalked into a policy position where its economy is over-reliant on the Chinese market,” Dr Coyne said in a ­submission.

“The Australian government needs to apply a broader national security lens to its economic ­policymaking.”

However, Professor Laurenceson said if Australia sought to shift trade to other countries, “opportunities with China that are left on the table would quickly be snapped up by Australia’s inter­national competitors”.

“The combined effect will cost Australians jobs and by weakening the economy will make Australia less, not more, secure,” he said.

Professor Laurenceson said the suggestion that Australia also needed to reduce reliance on Chinese foreign investment “does not make sense”, because the country held only 2 per cent of Australia’s foreign investment stock.

The US accounts for 26 per cent of total foreign investment in Australia, followed by Britain (18 per cent), Belgium (9 per cent), Japan (6 per cent) and Singapore (3 per cent).

“Australia’s foreign investment profile does indeed have a large single-country exposure, but this is to the US, not China,” Professor Laurenceson said.

Coronavirus-induced supply chain shocks, foreign interference and worsening US-China relations have intensified debate over Australia’s trade reliance on China, which spent a record $153bn on Australian goods and services in 2018-19.