Australian vulnerability to Chinese economic influence is exaggerated: ANU Policy paper

27 March 2017

A new policy paper from The Australian National University (ANU) has found Australian vulnerability to Chinese economic influence is exaggerated, although China is increasingly using economic policy to exert political and security influence.

The policy paper recommends Australia strengthen public awareness and transparency around the channels China uses to build influence, in order to reduce its susceptibility to undue pressure.

The paper was released today by the ANU National Security College (NSC).

NSC Head Professor Rory Medcalf said popular perceptions of Australia's vulnerability to Chinese economic pressure are exaggerated.

"The character of our economic ties means there are limits to the pressure China can apply without imposing sizeable costs on itself," Professor Medcalf said.

"Even if it wants to achieve a security or political gain, China is unlikely to interfere with those Australian exports that matter to its economy as well as to Australia's. China imports two-thirds of its iron ore, of which Australian producers supply around 60 percent," he said.

The paper, China's economic leverage: perception and reality, is available to read here - http://nsc.anu.edu.au/research-and-publications/policy-paper-2.php

Key Points:

  • Perceptions of Australia's vulnerability to Chinese economic pressure are exaggerated. Some individual sectors are more vulnerable than others but this does not extend to the economy as a whole.
  • Economic pressure that would have the biggest impact on Australia, notably through the iron ore trade, would also impose restrictive costs on Beijing.
  • The intersection of politics, domestic interests and public perception is where China is most able to use economics for influence at the potential cost to our independent decision-making.

Policy Recommendations:

  • Strengthen transparency around the channels that China uses to build influence in Australia, including at the state, territory and business level as well as in its relations with the Commonwealth.
  • Improve awareness of Australia's economic relationships, including our diverse investment ties, to give Australian voters and decision-makers more perspective about the nature and limits of Chinese influence.