China’s trade dispute costs $ 3 billion in lost exports from Australia

Photographer: Brendon Thorne / Bloomberg

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Australia’s trade battle with China last year cost about $ 3 billion in merchandise sales, and that relatively small impact suggests there is a reduced economic need for the country to bow to Beijing’s pressure.

This is the value of Australian exports lost in 2020 compared to the previous year and covers goods from copper and coal to wine and lobsters that are now subject to trade restrictions by Beijing, according to Chinese customs data. The impact on some of these industries has been wild, as exporters are forced to abandon the largest market and look for customers elsewhere.

At the same time, the breakdown of infrastructure, aided by the state, to save its economy from the pandemic, has raised the amount of iron ore it needs to fuel record steel production. And there, Australia is the dominant producer. Purchases in China rose nearly $ 10 billion last year.

The waived value of supplies of goods to China does not capture substitute sales in new markets or changes in international prices and exchange rates. It is also down by total exports of $ 257 billion from Australia in the first 11 months of last year. Meanwhile, China’s total imports from the world fell by 1.1% in 2020, as the pandemic reduced supply chains and reduced demand.

Trade retaliation in Beijing has stopped targeting the most important products for its own economy – iron ore and liquefied natural gas. They are also the biggest winners in Australia. Australia is a developed economy the most dependent on trade with China, and the two concluded a free trade agreement in 2015. Relations have deteriorated since 2018, when Canberra banned Huawei Technologies Co. from its 5G network and went into freefall in 2020, after the government called for an independent probe into the origins of the pandemic.

China has made noises about ending its dependence on foreign iron ore, but Australian miners are incredibly profitable, and the government has few alternatives to avoid costs for its world’s largest steel industry. Gas is seen as a crucial fuel for the implementation of Beijing’s goal of carbon neutrality, while it is understood from coal. China does not produce enough domestically and, again, Australia is among the world’s top suppliers.

– With the assistance of Jasmine Ng, Shuping Niu, Dan Murtaugh and Dennis Ting