Since the publication of part one of this paper, further deterioration in the Australia-China political and trading relationships has occurred, with the media offering useful commentary and analysis of the escalation, including as it relates to exports of wine, barley and coal, so this paper will not dwell on such matters.
Trade advocacy, multilateral or bilateral trade agreement dispute resolution processes and appropriate appeal to the World Trade Organisation are required to remedy Australia’s serious existing trade issues with China. Particular care is needed, however, to not allow miscalculation or errant politics to kill the “golden goose” that forms our leading trade partner. Australian exports to China may presently be telescoped and will dominate Australia’s two-way trade for some years to come, but the high degree of current dependency is escapable. There is perhaps a need to expedite diversification: the volumes of Australia’s once-biggest export, coal, have been steadily declining for some years, to be down by 30 per cent over the past year to September, with liquefied natural gas (LNG) down by 53 per cent over the same period and iron ore exports into China forecast to fall by 22 per cent into 2021.
This paper seeks to identify if, where and how Australia can diversify its export base.
- Despite serious current issues, Australia’s export reliance on China as a key destination for valued commodity exports will continue. Concurrent initiatives to broaden and grow the export base have to be pursued.
- Australia has an unequivocal global advantage in resources and human capital. The extent of foreign investment and technology imported to develop commodity industries has over-concentrated export type and destination.
- Australia does not have a deep historical trading tradition, as a proportion of gross domestic product. Insufficient companies export, while geography, economic history and structural constraints have restricted diversification.
- The opportunity exists to engender in business a pioneering, self-initiated exporting spirit. Governments, industry bodies, chambers of business and commerce, export-oriented industry clusters, research organisations and interested academia all have a role to play in developing a 50-year strategy with practicable, achievable pathways to a broader and deeper export base beyond resources commodities.