• Alistair Nicholas

Risks for Australia as China looks to diversify sources of supply

As readers of this blog know, I have long been concerned that the "megaphone" approach to diplomacy taken by many of our politicians has been unhelpful to our relationship with China. We now need to consider the very real risk that China is looking to diversify its sources of many imports away from Australia.

Following a ratcheting up in the rhetoric between Canberra and Beijing since the coronavirus outbreak, China has suspended imports of beef from four Australian abatoirs and is threatening tariffs of nearly 80 percent on Australian barley. In an opinion piece published by The Sydney Morning Herald and The Age today, I argue that China may have a deliberate strategy to diversify its sources for key imports: Put down the megaphone or China might opt for other imports.

I argue that such a strategy is tied up in President Xi Jinping's Belt and Road Initiative (BRI). I point to the fact that when China first initiated anti-dumping action against Australian barley in 2017, it immediately signed an agreement with Kazahkstan to import barley from the Central Asian republic.

In the SMH/Age article, I said this did not "bode well" for Australia and recommended the following strategy:

  1. That we should put down our megaphone and start talking respectfully and directly with Beijing as an equal (note this does not mean we need to kowtow to or appease Beijing in any way - we need to assert our values and rights, but we shouldn't do it on the world stage for the purposes of point scoring in our domestic politics);

  2. We should support the BRI given its importance to Xi Jinping's domestic and international prestige, and given that support for the overall concept would not compromise our sovereignty as we would still assess projects on a case-by-case basis; and,

  3. That we start to diversify our own export markets to mitigate the risks of Chinese economic coercion and to ensure we have a stronger voice in the bilateral relationship.

The full article can be read in The Sydney Morning Herald or in The Age.

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