Morphing Risks to Australia’s Goods Trade with China

In the past 12 months, Australia’s trading interests in China have been threatened by two major challenges. The first is the February 2020 US-China Economic and Trade Agreement, which commits China to expand its purchases of US goods and services by US$200 billion over 2020 and 2021 and potentially beyond. This has possible implications for around one-third of China’s merchandise imports from Australia (or two-thirds of imports other than iron ore).

The second challenge is the widely publicised deterioration of Australia’s bilateral relationship with China, which has already affected exports of a number of products. 

This paper examines both challenges and looks in some detail at the risks to Australia’s trade for a wide range of commodities. It also reviews the way in which the Biden Administration is likely to carry forward the US-China relationship and at policy implications for Australia, including strategies for engaging with the United States and China.

At the start of 2020, the US-China Economic and Trade Agreement (the Phase One Agreement or Agreement) captured the attention of Australian policy makers and business. China had agreed to substantially increase goods imports from the United States in 2020 and 2021 and to accept certain US standards and conformity assessment procedures to assist US companies to access Chinese agricultural markets. 

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Authors: 

• Mike Adams is a former Department of Foreign Affairs and Trade (DFAT) Economist 
• Ron Wickes was Director of the Trade Analysis Section of DFAT from 1999 until 2008
• Nicolas Brown headed DFAT’s branch responsible for analysis and strategic advice about trade and economic issues