Australia’s response to Chinese economic coercion: towards a comprehensive strategic approach to export diversification

The policy challenge: On a range of measures, Australia’s merchandise exports have become more concentrated on China since 2000. Increasing geographical concentration reflects China’s growing economic weight, opportunities created by its heavy industrial phase of development, and its emergence as the epicentre of growth in global manufacturing.

Increasing product concentration across the range of Australian goods exports reflects our growing pre-eminence in minerals and energy and, to a lesser extent, rural products. This is not just an iron ore story about China: it applies to all our major commodity exports to the rest of the world. Over the last few years, an increasingly uncertain and difficult international environment, dominated by growing US-China rivalry, has accompanied escalating mistrust between Australia and China – a fact intensified by China blocking or limiting key Australian exports over the past two years. Mistrust has fuelled a debate in Australia on whether we are too dependent on the Chinese market and therefore overly vulnerable to disruptions to trade. It also has led to active government facilitation in diversifying export trade: the aim is to maintain trade with China while developing other markets.

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Authors

Mike Adams is a former Department of Foreign Affairs and Trade (DFAT) economist, including serving as Australia’s economic counsellor in Beijing (2000-2004).
Ron Wickes is a past Director of the Trade Analysis Section of DFAT. In 2005 he was awarded a Public Service Medal for contributions to trade policy.
Nicolas Brown headed DFAT’s branch for analysis and strategic advice on trade and economic issues (2003-2009) and 
was previously Deputy High Commissioner to Malaysia  
(2000-2003).