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China - Australia's export dependence makes Australia very vulnerable
China has in the period 2000-2019, very been an immense opportunity and benefit to the Australian economy but it is now also becoming a risk. China is by a large margin, Australia's dominant trading partner.
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https://www.abs.gov.au/articles/australias-trade-goods-china-2020
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"China is Australia’s biggest trading partner for both the export and import of goods. Figures 1 and 2 below shows the dominance of China, with 39% all goods exported in 2019-20 going to China, while 27% of all goods imported were from China."
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https://www.afr.com/policy/economy/china-hits-48-8pc-of-australian-exports-20200804-p55i9d
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24/8/20 "China's share of Australian exports have reached an all-time high, rising to 48.8 per cent and driving the 30th consecutive monthly trade surplus to $8.2 billion.
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This export dependence has now become a major vulnerability to the Australian economy, particularly since Australia lobbied globally for an international investigation into the source of COVID-19 (SARS-CoV-2).
Now, China is retaliating/punishing Australia it seems, or as Niall Ferguson puts it - seeking to make an example of Australia.
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A downside scenario could lead to a 50 per cent drop in exports to China, including iron ore. "This would cause Australia’s total merchandise exports to decline by 20 per cent, leading to a $76 billion loss in export earnings, causing a sizeable 3.8 per cent hit to nominal GDP. "Our modelling suggests that in this scenario, the Australian dollar would be around 16¢ lower compared to baseline over the next 12 months," Citi said.
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18/11/2020 "China is angry. If you make China the enemy, China will be the enemy," a Chinese government official said in a briefing with a reporter in Canberra on Tuesday. The dossier of 14 disputes was handed over by the Chinese embassy in Canberra to Nine News, The Sydney Morning Herald and The Age in a diplomatic play that appears aimed at pressuring the Morrison government to reverse Australia's position on key policies. The list of grievances also includes: government funding for "anti-China" research at the Australian Strategic Policy Institute, raids on Chinese journalists and academic visa cancellations, "spearheading a crusade" in multilateral forums on China's affairs in Taiwan, Hong Kong and Xinjiang, calling for an independent investigation into the origins of COVID-19, banning Huawei from the 5G network in 2018 and blocking 10 Chinese foreign investment deals across infrastructure, agriculture and animal husbandry sectors.
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07/11/20 http://puzzlefinancialadvice.com.au/2020/AFR/201107_AFR_Australian_exporters_brace_for_China_ban_Eye_new_markets.pdf
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While Australia is not the only target of China's punishment, Australia is probably the most vulnerable because of our export dependence on China, but Australia's arrogant and antagonistic diplomacy towards China, has very clearly irritated/angered China.
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https://thediplomat.com/2020/11/china-australia-relations-continue-their-downward-spiral/
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In recent weeks a series of Australian industries – from barley, beef, coal, and cotton to lobster, timber, and wine – have been the target of anti-subsidy and anti-dumping measures or had deliveries delayed.
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Australian needs to learn from its Asian neighbours, in how to deal with China - and it needs to be less of a political embarrassment to out Asia-non-Chinese friends.