Pandemic Causes Global Business Community To Find Alternatives To China
The global supply chain shocks that stemmed from the lockdowns across the globe that continue to be felt to this day signalled to many members of the public and private sectors that it can be very dangerous to put one’s economic eggs in one basket, especially if that basket is thousands of miles away and out of one’s control. While this reality is quite apparent in America, it is far more apparent and dire in countries that have been intimately dependent on China to fuel their growth by serving as an export sink for their natural resources. One such country is Australia.
According to The Epoch Times, the business community in Australia have seen the harsh reality of being overly dependent on Chinese economic growth play out over the last eighteen months. Indeed, Australia’s trade relationship with China is a rather unusual one, with Australia racking up massive trade surpluses with The Middle Kingdom on account of China’s insatiable appetite for Australia’s natural resources. But in light of the global pandemic, many Australian businesses are reassessing the prudence of being so reliant on a single market.
This sentiment was also expressed by Federal Treasurer Josh Frydenberg. In a speech last week, Frydenberg encouraged Australian businesses to adopt a “China-plus” strategy which would see them establish alternate or supplementary markets in other fast-growing economies in the region. Frydenberg told Sky News on September 12th that “I think the business community is waking up to the fact that they do need to diversify their markets. They can’t have all their eggs in one basket, namely the China basket, that’s why I talk about China plus,”, adding that “it is really businesses and governments that encourage this diversifying of markets and diversifying of supply chains as well.”.
This call from Frydenberg comes at a time when bilateral relations between the two nations are near all-time lows. Exports to China, one of the key drivers of growth in Australia, has come under threat not only due to economic uncertainty in China, but also geopolitical tensions that were inflamed significantly when Australian Prime Minister Scott Morrison called for a thorough investigation on the origins of the covid-19 virus.
This increasingly intimate relationship between economic policy and foreign policy was echoed by Frydenberg, who said that “There’s an increasing overlap between what our economic policies and economic interests, and our national security policies and national security interests, and Australia has been targeted by China’s economic coercion, just look at their response on barley, beef, coal and wine exports from Australia,”. But Frydenberg was also careful to provide an optimal note to the situation by adding that “Today, our economy has been remarkably resilient, we have been able to find other markets, and that goes to the high quality and high premium paid for, for Australian goods and services,”, eluding to the universality of raw materials exports with regards to establishing new markets.