Comprising 85,681 farm businesses, 99% of which are Australian owned and operated, agriculture is crucial for the Australian economy. It’s estimated our major agricultural supplies consist of 29.8% grains and oil seeds, 24.0% meat, 13.5% industrial crops, 7.0% wool, and 6.6% dairy. However, the bilateral relations between China and Australia are rapidly deteriorating.
This is important as China is known as Australia’s largest trading partner, where the two-way trade between both countries was worth $194.6 billion annually at the commencement of the COVID-19 pandemic. Australian agricultural exports are a significant chunk of this trade. Although our exports to China were continuing to grow during this time, concerns that the global market would not continue to do well were raised.
In a matter of months, trading plunged, leading Beijing to cut-off beef imports from four of Australia’s largest abattoirs in early May last year, representing one third of our $3.5 billion of beef exports to China.
China then proceeded to execute a new custom check on rock lobster, introduced bans on timber, slapped tariffs of up to 200% on Australian wine and scaled back imports of Australian copper concentrate. In mid-December 2020, China formally black-listed coal, known to be one of our export cash cows, contributing $70 billion of total exports.
Losses in some industries, propped up by a boom in iron ore trade, raised exports to China of up to 40 million tonnes in December, from 34 million in November.
Economic growth is now predicted to be relatively subdued due to the effects of COVID-19 related shutdowns during mid-last year. However, growth in 2021-22 is assumed to rebound strongly to 4% as infection rates have remained low, allowing economic activity to recover sooner.
Australian-Chinese relations are continuing to sour because Beijing’s crude use of trade sanctions to penalise Australia for real or imagined slights signifies that a trading relation essential of mutual benefit risks being subject to persistent politically motivated interference. However, it is clear that without more negotiation between Australia and China that these trade disputes will continue on and continue to affect the Aussie economy.
In the meantime, the Australian Government has implemented funding for medical products manufacturing under the Modern Manufacturing Initiative (MMI), the centrepiece of the Governments $1.5 billion Modern Manufacturing Strategy. This will help drive scale and competitiveness in medical products manufacturing, further increasing commercialisation, translation of local research, supply chain integration and end to end collaboration.
