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The politicisation of Australian agricultural trade with China suggests that new export markets need to be cultivated

Export marketing Agriculture Exports International trade Relations with China China Australia

The Australia-China trade relationship has become increasingly politicised. Australia is becoming increasingly exposed to Chinese coercion as a result of a high proportion of its exports being sold to China. While Australian agricultural exports remained steady year-on-year in the first six months of 2020, the latest trade data from China suggests that tariffs and other trade barriers are starting to take a toll on the trade relationship. It is becoming increasingly clear that Australia will need to develop other export markets to reduce its reliance on China. As high quality, premium agricultural products remain in high demand globally, there is no shortage of countries that Australian agricultural commodities could be exported to.

Key points:

  • More than one-third of Australian agricultural exports are sold to China – a level of trade dependence that has not existed since the 1950s, when a similar share was exported to the United Kingdom.
  • Beijing has shown that it is not afraid to use the trade relationship for political ends. According to Australian trade data, the trading relationship remained steady despite increased friction in the first six months of 2020. The latest Chinese customs data, however, indicates that the relationship is deteriorating.
  • While China is the largest single market for Australian agricultural exports, global demand for high-quality farm goods remains high. There are many other markets that most of those exports could be diverted to if the relationship were to continue to sour.
  • A reinvigoration of Australia’s trade diplomacy is required to secure the opportunities offered by those markets.
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