Queensland’s trade with its biggest trading partner China has halved from A$27.5 billion in 2019-20, to A$14 billion in 2020-21, its lowest point in five years. The latest trade data reveals that sanctions on goods like coal, seafood and beef have taken a toll on the state’s economy.
Some metals used for technology and construction, such as copper, zinc and aluminium, have come through unscathed, while exporters continue to find new markets around Southeast Asia.
Nationally, however, Australia’s economy is being exposed to new pain as iron ore prices have fallen from a July peak of A$300 a tonne to just A$228 last Thursday night, as China pulls back its steel production.
Comments in the Australian press point to the move as being part of a bigger effort from China to end its reliance on our iron ore and punish Australia for failing to toe the Beijing line on human rights, the origins of COVID-19 and telecommunications giant Huawei. And because iron makes up the vast majority of exports to China, falls in price have an outsized impact on our economy.
In an interview with the ABC a month ago, Chinese Foreign Ministry spokesman Zhao Lijian said that Australia was being punished because it was trying to attack China on behalf of the United States, and suggested that American farmers were the big winners from Chinese tariffs on Australian goods. He made it clear Beijing had deliberately targeted Australian products.
China’s restrictions on other exports – including coal, copper, beef, wine, cotton, barley, wood and lobsters – cost Australia A$6.6 billion from June 2020 to February 2021, according to the latest data.
While US cattle farmers have grabbed a larger Chinese market share at the expense of Australian producers, a range of other countries, including Indonesia, New Zealand and France, have been the chief beneficiaries in other sectors.
The impact on our economy will show up in a lower value for the Australian dollar and a significant hit to government coffers.
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