China-Australia Trade Dispute

by Lindsay Wong

Picture Credit: simon2579/Getty

For the better part of 2020, China and Australia have been embroiled in a trade dispute that has altered their relationship from somewhat friendly to outright hostile. China was once Australia’s top trading partner, but this has changed because of the ongoing trade dispute which has no end in sight. Going as far back as the 1990s, the two nations have faced much friction on the topic of trade agreements and the arrival of COVID-19 has only exacerbated tensions. The trade dispute has not only affected the economy, but with the pandemic, the situation has heightened racial and ethnic tensions in Australia. China and Australia’s clash was not propagated by just one country—both contributed to their worsening mistrust, which has ultimately culminated in a relationship that seems too tense to ever improve significantly. The escalation of the trade dispute cannot be attributed to just one factor as there were a number of factors at play.

China and Australia’s diplomatic relationship got off to a rocky start in the 1990s, when then-Australian Prime Minister, John Howard, openly supported the United States’ activities in the Taiwan Strait and cancelled an import financing program of which China was the main beneficiary. The relationship seemed to improve when he met then-Chinese President Jiang Zemin in person, and established a strategic economic partnership with mutual benefits at its core, making China Australia’s top trading partner. This is evident from the numbers published by the Australian Bureau of Statistics that show that during 2019 and 2020, China accounted for 39% of Australia’s exports and 27% of its imports. In November 2019, China established a list of restrictions against Australian products that were essential to the latter’s economy, including massive tariffs on wine, barley, beef, coal and others. This was partially in response to escalating anti-Chinese narrative in Australian media. Overall, losing China as a trading partner would put Australia in a worse position and cost Australia 6% of their GDP. 

The past few years has seen activities by both countries threatening their diplomatic relationship. For example, China Mengniu Dairy tried to take over the Australian drinks business, but they were rejected. Australia also established anti-dumping and anti-subsidy investigations against Chinese products. China and Australia’s bickering has even been exhibited on social media as they continue to egg each other on. Recently, Zhao Lijian, the spokesman for the Chinese Foreign Ministry, posted a photo of an Australian soldier holding a knife to an Afghan child’s throat, referencing Australia’s alleged war crimes from the past. Australian Prime Minister Scott Morrison demanded an apology but to no avail. In 2018, Australia became the first country to publicly ban China’s Huawei from their 5G network, further aggravating tensions.

The onset of COVID-19 changed the West’s perception of China, and people of Asian descent around the world have felt the real-life consequences as anti-Asian racism has been on the rise as a result. In Australia, people of Chinese heritage were physically and verbally attacked on multiple occasions. Scholars have stated that the turning point in China and Australia’s worsening relationship was the dispute over the origins of COVID-19, which had been argued about by other global leaders, particularly from the West. In April, Australian Defense Minister Marise Payne asked the World Health Organization to investigate the origins of COVID-19. This was the last straw for China, and they started imposing restrictions on trade. International affairs analysts have concluded that Australia is an example of how China can essentially engage in a war against a country they know they cannot lose to, causing huge negative repercussions for that country. Because of China’s power on the global stage, the other country always has more to lose.

Analysts note that there is a slim possibility that China and Australia’s relationship can be repaired. One of the first steps would be for Australia to explicitly outline what is in their national interest and making it clear to the other party. Nevertheless, at the moment, this seems unlikely. China will most likely enact even more trade restrictions and sanctions as both countries are also try to “save face” in the process. Unfortunately, this has caused citizens to suffer. Anti-Asian racism remains prominent, on top of the ongoing COVID-19 pandemic. However, experts have pointed out that history is filled with conflicts and resolutions, so there is still room for optimism and hope amongst dire circumstances.

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