The year 2020, when the trade war began

6 November 2020

It is highly likely that 2020 will be remembered as the year the Australia-China trade war began - unless both governments can find ways to return to the path of strategic cooperation that served us so well in the past.

This year is "highly likely" to be remembered as the year the Australia-China trade war began if the Chinese Government slaps more trade bans on Australian exports such as lobster and coal, ANU economist Professor Jane Golley has argued.

In the wake of the Australian Government's call for an independent inquiry into the origins of the coronavirus in Wuhan, the Chinese Government has made its disapproval of these actions well known.

"A string of examples in 2020 suggest that Australia has become the prime target for Beijing's coercive practices, with barley, beef, wine, and education all being subjected to a range of restrictions imposed by Beijing since then," Professor Golley, Director of the ANU Australian Centre on China in the World, said.

"The Chinese Government claims that its recent trade bans on Australia don't amount to coercion, but deniability will become far less plausible if they suspend imports of Australian wine, lobster, sugar, coal timber, wool, barley and copper ore."

These unofficial trade bans would deal a blow of around $6 billion to the Australian economy, she said.

"It is highly likely that 2020 will be remembered as the year the Australia-China trade war began - unless both governments can find ways to return to the path of strategic cooperation that served us so well in the past," Professor Golley said.   

Preliminary analysis by Professor Golley and her PhD scholar Vishesh Argarwal indicates that bilateral relations between Australia and China deteriorated in political terms during the period from 2013 to 2018 (measured by an index that reflects Australian Government 'messaging' to China).

"This deteriorating relationship is associated with a reduction in export growth, including for our top exports, during that period: iron ore, gas and coal," Professor Golley said.

"We think this may well be a signal of things to come if the political relationship continues along its current trajectory."