According to a state government minister in Australia 'there is a tsunami out there called China and we have to find a way around it'. That was the rallying cry recently of Andre Haermeyer, the Victorian government's minister for manufacturing, to his political colleagues around Australia. Victoria is the nation's manufacturing home and some business and political leaders there are concerned the industry will sustain heavy job and investment losses as China's low-priced imports flood into the country. This week some Australian politicians were trying to get a handle on what the growth in Chinese manufacturing of clothing, footwear, white goods, car parts and electronics means for domestic manufacturers. But others were quietly excited by opportunities presented by China's 2.1 per cent revaluation of the yuan. Australia's Trade Minister Mark Vaile, who is overseeing progress on the proposed Australia-China free-trade agreement, says: 'China is Australia's second-largest export market and the revaluation ... will make Australian exports cheaper, having a positive impact especially on resources and agriculture products.' In short, once again the rise of China is perceived as a double-edged sword. Australia's manufacturing sector, while comprising less than 15 per cent of the nation's gross domestic product, is still a politically powerful lobby group. And while it and its political allies like Mr Haermeyer have not yet resorted to asking the government to do as the US has done - and impose quotas on Chinese imports of textiles and clothing products - there is no doubt that a battle plan is not far away. Even if the Australian manufacturing sector aims its guns at China, it needs to remember that Canberra is keen to keep Beijing on its side so that the vaunted free-trade pact sees the light of day. Industry Minister Ian McFarlane was lukewarm in his response to Mr Haermeyer's call for an Australia-wide manufacturing strategy. Perhaps it was because the Department of Foreign Affairs and Trade has noted that 'exports of [manufactured goods] to China have grown rapidly, their value increasing by 160 per cent between 1999 and 2004, compared with only 13 per cent to the rest of the world'. That does not mean some local manufacturers will not feel the chill wind of increased competition from Chinese imports. Remember, however, that other manufacturers here are relishing more trade with China. Take the Australian automotive industry. General Motors, Toyota, Ford and Mitsubishi all have a substantial presence here. They are licking their lips at the prospect of exporting cars and auto parts to China. Contrast this with the clothing industry, in decline since the 1980s. Now China dominates the Australian clothing and footwear market. One leading clothing manufacturer, Andrew Edgar, says the threat of low-cost competition is an irreversible reality. However, even in this case the impact of Chinese imports might be exaggerated. As ANZ Bank's chief economist Saul Eslake said last month: 'For all the attention devoted to China's exports of textiles, following the [belated] dismantling of trade barriers... their share of total exports has fallen from nearly 24 per cent in 1997 to less than 14 per cent in the first four months of 2005.' Perhaps the image of a tsunami to describe the impact of China on Australia's manufacturing industry is a just another case of western political rhetoric. Greg Barns is a political commentator in Australia and a former Australian government adviser
