China-Australia relations: damage from trade bans limited as Australian exporters ‘successfully pivot’ to new markets

China’s targeted bans on Australian goods have had an insignificant impact on most Australian exporters, the Australia-China Relations Institute says

The institute says in a new report its findings undermine claims that Australian businesses with close trade ties to China are naive or irresponsible

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Australian rock lobster exports have been targeted by Beijing in a trade dispute with Canberra. Photo: AFP

Published: 4:30am, 10 Sep 2021Updated: 1:35pm, 10 Sep 2021

The cost of China’s ban on a series of Australian goods has been almost negligible for some of the country’s exporters, indicating Australia’s dependence on the world’s second largest economy for trade has not been as devastating as some had predicted, a new report has found.

Free markets have provided exporters “risk mitigation mechanisms”, including opportunities to redirect goods to other countries or switch to supplying other products, and financial insurance in the form of earlier bumper profits from sales to China that have helped mitigate the current hard times, the report by the Australia-China Relations Institute (ACRI) at the University of Technology Sydney said.

Therefore, when governments in Australia or elsewhere, such as the United States, call for “collective action” to push back against Beijing’s “economic coercion”, their calls might be overblown as traders are free to rationally consider the risks and rewards of their relationship, said the report released on Thursday.

When trade disputes such as the one between China and Australia arise, however, it would be better for multilateral institutions like the World Trade Organization (WTO) to arbitrate them in line with agreed trade rules, the report’s authors James Laurenceson and Thomas Pantle said.

Traders should have the tools to resolve or mitigate problems without interference by governments, they added.