“Coercive economic policies” are one of the core tools of the Chinese Communist Party’s “wolf diplomacy”, and they are very unrestrained. The communiqué of the G7 foreign ministers’ meeting on May 5 criticized the CCP for “using economic influence to bully other countries,” and the next day, the National Development and Reform Commission of the CCP issued a statement on the indefinite suspension of all activities under the China-Australia Strategic Economic Dialogue mechanism, taking the CCP’s economic coercion of Australia since 2020 to a new stage. coercion since 2020 to a new stage.
On the face of it, Chinese economic coercion against Australia is extremely favorable. First, according to the Australian Bureau of Statistics, China overtook Japan as Australia’s leading export destination between 2009 and 2010; in the five years between 2014-15 and 2019-20, the value of Australia’s exports to China doubled from A$75 billion to A$150 billion. China is currently Australia’s largest import and export trading partner by far. 2020 bilateral trade in goods between Australia and China totalled A$229.623 billion, accounting for a whopping 35 percent of Australia’s total foreign trade and 12.47 percent of Australia’s GDP.
Second, according to David Uren of the Australian Strategic Policy Institute, “Australia has no realistic alternative market for a third of its exports and no viable alternative source for nearly a fifth of its imports, and It has to rely on China.”
In other words, the Australian economy has developed a certain dependence on China. It is by exploiting this asymmetry in the Sino-Australian trade relationship that the Chinese Communist Party has gleefully exercised economic coercion against Australia. Since May 2020, exports of Australian barley, beef, copper, sugar, lobster, timber, coal, bottled wine, and a host of other products have been called off or sanctioned by the CCP’s Ministry of Commerce.
The Chinese Communist Party thinks it has the victory in hand. At one point, Hu Xijin, editor-in-chief of the Global Times, a Communist Party mouthpiece, even said that Australia was a piece of chewing gum on the bottom of China’s shoe, while Australia’s Sydney Morning Herald reported on November 18, 2020 that an unnamed Communist Party official shared a document from the Chinese Embassy in Australia in a media interview in Canberra, listing 14 acts by the Australian government that caused the Communist Party’s These include the decision to ban Huawei from 5G tenders in 2018, the failure to recognize the CCP’s claims in the South China Sea, and the so-called “reckless interference in Hong Kong, Xinjiang and Taiwan issues,” among others.
This shows that the CCP’s economic coercion of Australia goes far beyond the economic sphere and is intended to bring Australia into full submission to the CCP – an important strategic goal of the CCP’s “grand peripheral diplomacy” in recent years.
However, it turns out that the CCP has once again overestimated itself, and its economic coercion against Australia has largely failed.
First of all, the CCP’s sanctions have not had much impact on China-Australia trade in goods in general, but rather hurt itself.
Looking at the breakdown of Australia’s exports to China, exports of food and beverage products such as lobster, sugar and wine showed a relatively obvious downward trend; exports of resource materials such as coal, copper and logs to China showed a V-shaped distribution from more to less to more; and iron ore was relatively exceptional, with exports to China increasing by 7 percent in 2020 and export bills rising by 9 percent, resulting in a 15 percent increase in total exports.
From this, it is easy to understand the situation shown by the data released by the Australian Bureau of Statistics (ABS) on January 25: Australia’s total exports to China reached A$145.2 billion in 2020, down 2.16% compared to A$148.4 billion in 2019, but this is already the second highest total exports after 2019 since ABS officially recorded China-Australia trade data in 1988.
At the same time, Australia has actively sought to diversify its markets, with related goods that were more affected by the Communist Party’s sanctions gradually finding alternative markets to offset the loss of the Chinese market, and overall export value has now recovered. For example, Australia’s barley exports to China fell from $130 million in April 2020 to $64 million in one month, causing total barley exports to the world to fall to 40% of the original amount in that month; however, in February this year, Australia’s total global barley exports rebounded to $190 million, higher than the amount before the CCP imposed tariffs. As another example, total global exports of Australian coal remained essentially flat, although exports to China decreased from $1.1 billion in May 2020 to $22 million in February this year, but exports to Japan, South Korea, and India increased.
Thus, while Australia experienced its first recession in about 30 years in 2020 with an overall 7% decrease in exports and a 5% decrease in imports, and an annual GDP growth rate of -1.1%, this was largely influenced by the epidemic and did not stem from the Chinese Communist Party sanctions. Moreover, according to data released by the Australian Bureau of Statistics on March 3, the Australian economy grew by 3.4% and 3.1% YoY in the third and fourth quarters of 2020, respectively, the first time in more than 60 years that growth exceeded 3.0% for two consecutive quarters, indicating that the Australian economy has emerged from recession.
On the other hand, the Chinese Communist Party’s sanctions against Australia have led to a wave of price increases and rising costs on the mainland. For example, the price of barley for feed rarely exceeds that of wheat, beef prices have surged abnormally by about 50%, and other food prices have also risen sharply accordingly; cotton yarn prices have risen by 30%, and clothing prices have risen accordingly; the cost of coal procurement for mainland coal power companies nationwide has increased by about RMB 47 billion extra in the first quarter of this year, while the cold winter of 2020 has seen power outages and “pulling the plug on electricity in many parts of the country “, which public opinion believes is related to the ban on Australian coal. The Chinese Communist Party hits Australia, but does not want to hurt itself as well.
Second, in the face of economic coercion by the Chinese Communist Party, Australia not only did not give in, but also fought more and more courageously.
The reversal of Australia-China political relations since 2017. the ban on Huawei’s participation in building Australia’s 5G network in 2018, the first request to trace the source of Wuhan pneumonia virus in 2020, etc., made the CCP so annoyed that it openly imposed economic coercion on Australia (imposing trade bans or increasing tariffs on more than $20 billion of Australian exports to China). But instead of backing down, as the CCP desires, Australia has continued to make moves in the face of the CCP’s sanctions. To take a recent example.
One, on April 21, terminated the “Belt and Road” agreement signed between the Australian state of Victoria and the Chinese Communist Party in October 2019. According to analysis by Luo Zhen, director of the Institute of Australia-China Relations at the University of Technology Sydney, Canberra could have simply let Victoria not renew the agreement for other reasons when it expires in 2023, saving face for the Chinese Communist Party. But Canberra’s rush to legislate at this time (December 2020 to pass the new Foreign Relations Act, which gives the Commonwealth the power to veto agreements between state governments and other levels of government and agencies and foreign countries), and its rush to implement the call to stop the “Belt and Road” as soon as it is passed, is a decision to declare to the CCP that ” We are not afraid of tearing our face off or of China’s reaction, at any time, in any event, in any way.”
Second, it has begun to re-examine China’s Landbridge Group’s agreement to lease the Port of Darwin (which the Australian Northern Territory government leased to the Chinese company for 99 years in 2015 for A$506 million), considering whether to force the Chinese company to give up its lease.
Landbridge Infrastructure Australia, which was created by the Chinese side to lease the port infrastructure from the Northern Territory government, has been failing to make an annual profit and made a loss of A$44.5 million last year, its largest annual loss to date, according to The Australian. The Australian media questioned why the Landbridge group had to endure annual losses of at least A$30 million while buying assets for more than A$500 million. “What are the strategically important considerations other than profit?” (In fact, the Port of Darwin is one of the four major U.S. military bases in the Indo-Pacific region, a lease that the U.S. has always disputed.)
Third, Australia is already preparing for a “military conflict in the Taiwan Strait”. In an interview with the ABC in late April, Australian Defense Minister Peter Dutton said that a military conflict between the Communist Party of China and Taiwan was possible and that “I don’t think the possibility of a conflict in the Taiwan Strait should be underestimated.” In a letter, Australian Home Affairs Secretary General Mike Pezzullo said the “drums of war” were getting stronger and that Australia should do what it could to defend its “precious freedoms”; he also said. “War may well be foolish, but it is even more foolish to hope that by refusing to think and care about it, we will be safe from the scourge of war” and that “Australia must be ready to send its soldiers to fight again.
These moves by the Australian federal government show that it has no illusions or fears about the Chinese Communist Party, but rather a fighting spirit.
Conclusion
The CCP’s economic coercion of Australia has at least three major advantages on the surface: first, China’s GDP exceeds Australia’s by more than 10 times (Australia’s GDP in 2020 is about $1.3 trillion, China’s $15.22 trillion); second, Australia’s degree of economic dependence on China (between 2015 and 2020, Australia’s trade surplus with China rose from $14.74 billion to $46.846 billion. The trade surplus provided by China has accounted for 80% of Australia’s total foreign trade surplus); third, the epidemic has hit Australia hard.
However, it is surprising that the Chinese Communist Party has not taken much advantage of Australia’s economic coercion, which is unexpected by many people. In fact, on the other hand, the Chinese Communist Party has been careful in its economic coercion against Australia, leaving some means of maneuvering.
For example, take the statement on “indefinite suspension of all activities under the China-Australia Strategic Economic Dialogue”: it only says “suspension” instead of “termination”; it says “indefinite”, but in fact it is “The National Development and Reform Commission is only a functional department of the central government. The Chinese Communist Party did all this with the intention of keeping a backhand for itself.
Another example is the China-Australia free trade agreement signed in 2015, in which the CCP made considerable concessions to Australia, and so far we have not seen the CCP bring this out to threaten the Australian side.
The international community can draw two valuable lessons from Australia’s response to the CCP’s economic coercion: first, the economic relationship between the two countries is interdependent, and although they may have a disparity in power and position, they have their strengths and weaknesses, so there is no need to be afraid; second, the CCP is weak and weak, and it is possible for even a medium-sized country or even a small country to use its wisdom to successfully defend its rights and interests in the context of the global countermeasures against the CCP. successfully defend their own rights and interests.
If we summarize these two lessons in one sentence, it is a well-known saying: We have nothing to fear but fear.
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