Trade tensions: Could boycotts hurt China more than Australia?

UNSW Business School's J.W. Nevile Fellow in Economics, Tim Harcourt, examines whether the recent trade boycott imposed on Australia by China could be expanded and why the boycott could potentially harm China more than Australia.

So recently we've been talking a lot about trade tensions in the world economy. In some ways, it started when the Chinese Ambassador to Australia took exception to Australia calling for an independent international inquiry into the causes of coronavirus.

China imposed a tariff on barley exporters claiming that they were dumping; that is they were providing unfair subsidies to barley exporters. After barley there was beef. Four abbatoirs in Australia were claimed to be not fulfilling technical standards for beef exports into China and were put on hold so that they could get to their technical standards up to scratch.

Again, Australia said these technical standards were nothing to do with the coronavirus inquiry call but had been on the cards for quite some time.

Will the boycott be expanded, and will it hurt Australia? Well, in terms of barley, there's already been a diversion of exports to India and to the Middle East and other markets in Southeast Asia. 

In terms of beef, beef is a very popular Australian export throughout the region [with] Japan, Korea, elsewhere in the world, including the Middle East. So for the most part, beef exporters have a very high-quality product that's very exportable.

Will it hurt Australia? Well, it certainly could. But in some ways, it could hurt China more. China has 1.3 billion people. China needs food security. China needs energy security. China needs high-quality education for its young generations. So any boycott of Australian goods would be potentially very hurtful and very harmful to Chinese consumers.

What approach can Australia take? Well, there's probably the "three Ds". One is diversification. Australia has in recent years diversified its trade to South Korea, Japan, ASEAN, India, the Middle East, North Africa, and to the Americas. Diversification is very much part of the Australian trade story.

Second, there is diplomacy. Bilaterally, I'm sure that the Trade Minister, Simon Birmingham, worked hard at trade diplomacy, particularly when the Chinese find that these alleged trade boycotts hurt China most of all - and also through the World Trade Organization, the WTO.

There is actually very broad support to look at the cause of the coronavirus, how it spread from Wuhan throughout the world, and what you do to combat a future pandemic. It's actually in the interests of the whole world community to find out how the coronavirus happened, and how we can predict the future pandemics in the 21st century.

So ultimately, an inquiry will help the Chinese people and a boycott of Australian trade will hurt the Chinese people. That's why I think ultimately, an international inquiry into coronavirus is good for China, Australia and the world community. 

And I expect also the trade between our two nations will continue and help the Chinese people prosper. Because at the end of the day, Australia needs China and China needs Australia.

To learn more read Barley, beef and bullies: trade tensions in a COVID-19 world or Getting back to harvest: The way forward after China’s barley tariff or contact Tim Harcourt directly.


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