Australia urged to ‘entrench’ role as China’s ‘indispensable’ commodities supplier after trade bans ‘fail’

Lowy Institute report claims China’s trade policies against Australia since early 2020 have ‘so far failed’ to meet their economic and national security objectives

China is most dependent on Australian iron ore, liquefied natural gas (LNG) and wool, the report showed, reflecting the two countries are ‘interdependent’

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China is most dependent on Australian iron ore, liquefied natural gas (LNG) and wool, the report showed, reflecting the two countries are “interdependent”. Photo: AP

Published: 5:00am, 22 Oct 2022

Australia should work to “entrench” its position as a key commodities supplier to China for the benefit of its economy despite ongoing tensions, according to a report from an independent Australian think tank.

Cementing Australia’s role of being the “indispensable” exporter to China can also give Canberra leverage in the face of Beijing’s ongoing “trade coercion”, said the Lowy Institute report.

Beijing’s trade policies and bans against a variety of Australian products since early 2020 have “so far failed” to meet their objectives of imposing substantial costs across the economy and changing Australia’s national security policy, the report added.

However, even as bilateral relations start to stabilise after over two years of strained ties, Australia should expect punitive measures to remain in place, either in whole or in part.

Given the enduring geopolitical rivalry between the US and China, and Australia’s position as a strong US ally, Canberra should assume that Beijing will continue punitive trade measures in one form or another

Richard McGregor

“Although geopolitics are changing the tone of the bilateral trade relationship, the global supply and demand dynamics are still the most important determinant for the resilience of the Australian export sector,” the report stated.

Beijing imposed trade sanctions on Australian products in response to calls from the previous Morrison administration for an investigation into the origins of the coronavirus in April 2020 and the earlier decision to ban Huawei Technologies Co. from Australia’s 5G network.

“Given the enduring geopolitical rivalry between the US and China, and Australia’s position as a strong US ally, Canberra should assume that Beijing will continue punitive trade measures in one form or another,” said Richard McGregor, the author of the report.