China tensions set to further pummel Australia’s coronavirus-battered economy

Officials in Canberra say they cannot meet Beijing’s conditions to re-engage in high-level dialogue on trade and other ties – and are prepared to ‘pay a price’

Optimists cite the past experiences of Japan and South Korea, but Australia’s position is weaker – and neither Canberra nor Beijing seem willing to compromise

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Relations have soured since 2018, when Australia barred Huawei from its 5G network, and went into free fall last year amid Canberra’s calls for an investigation into the origins of the Covid-19 pandemic. Photo: Shutterstock

Published: 10:48am, 3 Sep 2021Updated: 10:50pm, 3 Sep 2021

Australia’s economic resilience in the wake of China’s efforts to punish it for diplomatic slights has some down under declaring victory. They might be speaking too soon.

Former Prime Minister Malcolm Turnbull said last month that China’s campaign to “make us more compliant” has “completely backfired”. Beijing’s pressure, he added, “has demonstrated to China that they can pull all these levers and it doesn’t actually work”.

Exports continue to scale record heights even as China has blocked or limited a growing number of imports from Australia since May 2020. Still, the dispute – China accuses Australia of taking a hostile approach on issues ranging from a clampdown on foreign investment to questions on the origins of Covid-19 – is casting a shadow over the future.

A truck carrying iron ore is seen at a mine in the Pilbara region of Western Australia. Beijing had left the immensely profitable iron ore sector untouched until recently Photo: Reuters

Even as Beijing had left the immensely profitable iron ore sector untouched until recently, it is focusing on Australian products that would form the backbone of future trade, such as lobsters and wine, and warning its students against studying there.

“In the future that’s where the growth will be, all this middle-income stuff, and unfortunately that’s what’s being impacted in this conflict with China,” said Bob Gregory, a professor at Australian National University who has studied the economy for half a century.