The economic fallout from Australia's bitter diplomatic row with China may prove even more damaging to the economy than the COVID-19 pandemic, ex
Data by RaboBank shows that one third of all Australian food and agriculture exports are scooped up by China.
But as the Morrison Government continues to push back against Beijing in the face of rising political tensions, there are now fears Australia has become far too reliant on the authoritarian regime’s buying power.
At the same time, a looming food shortage crisis in China may force Communist Party officials back to the negotiating table.
‘Discord could have a far greater impact on Australian security and prosperity than COVID-19,’ public policy expert John Edwards told The Australian following China’s threat this week to block up to $6billion of Australian wine imports this week.
‘Even without the worsening of Australia-China relations, the larger trade and technology altercation between America and China threatens the global openness of trade and investment upon which Australia’s prosperity depends.’
Diplomatic relations between Australia and China have deteriorated significantly during the ongoing coronavirus pandemic. Pictured: Xi Jinping (left) and Scott Morrison (right)
Beef exports to China are worth $2.8billion representing 25 per cent of all Australian overseas sales
Customers buy meat at a market in Shenyang, in China’s northeastern Liaoning province on August 10, 2020
Edwards said Australia meshed with China’s economy ‘a long time ago’ and is now locked into its choice.
‘It chose its region, including its largest member, China, as the economic community to which it inescapably belongs.
‘It also long ago chose the United States as a defence ally to support Australia’s territorial independence and freedom of action.’
The balancing act between appeasing China for economic prosperity and securing it’s defensive interests by supporting the US has become increasingly difficult in the wake of the coronavirus crisis.
The graph shows that China scoops up one third of all Australian food and agriculture exports
Seafood exports to China are worth $770million representing 58 per cent of all Australian overseas sales
Wool exports to China are worth $1.9billion representing 77 per cent of all Australian overseas sales
That’s because 32 percent – or $12.6billion – of Australia’s $40billion in food and agricultural exports are gobbled up by China.
But Australia’s cosy long-standing economic relationship with China has recently been put at risk after Prime Minister Scott Morrison called for an independent international injury into the origins of the coronavirus.
Communist Party officials were outraged by the request and quickly moved to punish Canberra with economic sanctions.
Chinese Ambassador Cheng Jingye in April threatened that China consumers may boycott Australian red meat and wine over the issue.
This week it appears the totalitarian nation followed through on their intimidation tactics by launching an inquiry into allegations that Australia was dumping wine in China, the practice of selling wine below the cost of production.
The move follows huge tariffs on Australian barley and the banning of four of Australia’s largest red meat producers in May.
Wine exports to China are worth $1.1billion representing 42 per cent of all Australian overseas sales
Customers buy vegetables at a market in Shenyang, in China’s northeastern Liaoning province on August 10, 2020
Prime Minister Scott Morrison denied the allegations and said there was no evidence to support them.
Value of Australian agriculture exports to China:
Beef: $2.8billion or 25 per cent
Wool: $1.9billion or 77 per cent
Lamb: $1.2billion or 30 per cent
Fruit and nuts: $1billion or 40 per cent
Seafood: $770million or 58 per cent
Dairy: $661million or 26 percent
Cotton: $611million or 64 per cent
Wheat: $568million or 15 percent
Barley: $550million or 54 per cent
Hides and skins: $420million or 85 per cent
Oilseeds: $374million or 16 per cent
Live animals: $356million or 16 per cent
Sugar: $46million or 3 per cent
Vegetables: $39million or 3 per cent
Total: $12.6billion or 32 percent
Although Beijing is taking a tough stance against Canberra, a recent policy announcement by Xi Jinping revealed that China may actually need Australian food imports more than it’s letting on.
The ‘Clean Your Plate’ campaign is urging Chinese citizens to not waste food.
One of the main initiatives of the program is to mandate that groups of restaurant-goers must order one less dish than the number of diners.
So if there are five people out having a meal together, they can only order four dishes.
Although Chinese state media claims the utterly bizarre communist policy is about reducing food waste and not about an impending food shortage facing the country, international experts disagree.
Before the COVID-19 outbreak began in Wuhan, another pandemic was already having a disastrous effect on China.
African swine flu wreaked havoc on Chinese pork stocks and reduced the number of pigs in the country by about 40 percent.
To make matters worse, the Yangtze River has been overwhelmed by flooding which has severely impacted China rice fields.
‘After the outbreak of COVID-19, China’s exports have declined significantly, and this has reduced foreign reserves mainly in the form of the United States dollar,’ He-ling Shi, an associate professor in economics at Monash University, told the ABC.
‘Because of the shortage of foreign reserves, the Chinese Government now finds it quite difficult to purchase a sufficient amount of food to feed domestic customers.
‘The price (for pork), as far as I know, has increased by about 70 per cent in the last three months. That implies there is quite a severe shortage of pork in the Chinese market.’
China’s Yangtze River has been overwhelmed by flooding in recent weeks. Pictured: An aerial view of houses submerged by flood water on August 17, 2020, in Pengshan County, Sichuan Province
The floods have severely impacted China’s rice fields and their now concerns about the authoritarian nation’s food security
Rescuers are pictured in flood-affected areas after heavy rain in Neijiang in China’s southwestern Sichuan province on August 18, 2020