Australia sees ‘partial economic decoupling’ from China as Canberra weighs risks of over reliance after coronavirus disruptions

Parliamentary inquiry examined the vulnerability of supply chains, defence and foreign affairs after supply chains collapsed at the height of the coronavirus outbreak

Experts argued there was a critical need for Australia to plan its own network of supply chains to shore up sovereign resilience, with a need to drift away from China

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Australia is the world’s most China-dependent economy, accounting for 33 per cent of its exports. Photo: AP

Published: 7:30am, 4 Jul 2020Updated: 1:05pm, 13 Jul 2020

Australia is edging towards a “partial economic decoupling” with China as a result of the coronavirus pandemic, a new Australian parliamentary inquiry has heard.

In a new inquiry set up in May to examine the vulnerability of Australia’s supply chains, defence and foreign affairs, experts argued there was a critical need for Australia to plan its own network of supply chains to shore up sovereign resilience with a need to drift away from China.

The inquiry, findings of which could feed into state policies, followed an earlier debate in February when supply chains collapsed at the height of the outbreak in China.

Evidence submitted has highlighted that Australia has become too reliant on China as a result of a government push to capitalise on the world’s second largest economy.

For Australia, a key takeaway is that although we may hope for reconciliation [with China], the odds favour a partial separation

Alan Dupont

“For Australia, a key takeaway is that although we may hope for reconciliation [with China], the odds favour a partial separation,” according to a submission by Alan Dupont, chief executive of geopolitical risk consultancy, The Cognoscenti Group.

Dupont said Australia’s decoupling from China “is not an attempt to isolate China … but rather to establish a sustainable relationship” between China and the United States as the world is dividing into two competing trading and geopolitical blocs.

He said that Australia may be able to stay in a trading bloc with China and a security bloc with the US, but there is a growing possibility that Australia has to take sides, and if Canberra sides with Washington, the bilateral free trade agreements with Beijing and other countries will not hold.