Trade inertia may not last long as China-Oz ties sour

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Source: Global Times

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The latest trade data showed that rising disagreements between China and Australia have not impacted much on bilateral commerce, but the question is how long such trade inertia can last, if their tensions are not mitigated.

According to data released on Tuesday by China’s General Administration of Customs, the overall trade of goods between China and Australia remained steady in June at 98.03 billion yuan ($13.98 billion), up 2.49 percent month-on-month and 4.74 percent year-on-year. In the first half of the year, bilateral trade gained 1.8 percent year-on-year. Broken down, Australia’s exports to China in June reached 67.66 billion yuan, representing a growth of 9.89 percent from May.

Over the past months, some Australian politicians have been playing up public hostility toward China by claiming that the Pacific nation is under so-called “Chinese economic bullying” or “coercion”. According to a poll by the Sydney-based think tank Lowy Institute in late June, Australians’ trust in China has hit an all-time low. But the trade data clearly does not match what those politicians have asserted.

There is no need for some Australians to smugly assume that Chinese people cannot live without Australian products. If anything, it should be pointed out that the current goods trade data may not be sufficient to reflect the overall picture of China-Australia trade amid their brittle ties.

China’s recent actions toward Australia, including tariffs on barley imports from Australia, a temporary ban on its beef exports, and travel alert warning Chinese people not to travel to the country, could all be justified by the intention of ensuring Chinese people’s safety or responding to Australia’s troublesome provocations.

For instance, China’s Ministry of Foreign Affairs on Monday issued another travel warning that reminded Chinese citizens “to be extra careful about the local security risks and be cautious about traveling to Australia,” because “relevant Australian law enforcement agencies have arbitrarily searched Chinese citizens and even seized their possessions.” The alert came just days after the Australian government warned its citizens not to travel to China.

Still, current data and developments are enough to suggest that neither side is yet in a position to wage an all-out economic conflict despite their diplomatic tensions. This is perhaps why the impact of China’s recent actions is mainly confined to certain sectors such as education and tourism, and hasn’t been reflected in goods trade statistics.

Moreover, it is understandable that China-Australia trade data is seeing a bit of inertia. At present, it is the business confidence that may have suffered the most, and it will take some time for the wound confidence to translate into substantial blows. Naturally, Chinese businesses need to be vigilant of any escalating disputes between the two countries, which will cause an already bad situation to become worse.

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