After months of trade embargos and unwarranted tariffs, the Australian economic recovery and growth is a tight slap on China’s aggression towards “the land down under”. Australia did not relent and its Prime Minister has led his country to an economic growth which was beyond expectation after its first recession in three decades.
Since the Pandemic, Australia has been very vocal in its support for an open international investigation into Wuhan, China. This ultimately led to China’s reciprocated actions of banning exports from Australia such as that of coal and Barley and raising tariffs on Australian wine exponentially. But Australia bounced as China drove it to desperation, and found its feet among its allies such as India and Japan to effectively counter Chinese embargos and turn its economy around in a pandemic effectively negating the losses inflicted upon it.
The Australian Economy posted a growth of 3.3% in the last quarter surpassing every expectation. As the pandemic kept reeling states, Australia pushed back not just the pandemic but also the animosity in its relations with China and the country’s central bank expects a ‘solidly positive’ performance in the current quarter.
The paper dragon, in retribution to Australia calling for an investigation into China to learn the exact origins of the coronavirus, banning Huawei and Australian calls amid global outrage formishandling and covering up the severity of the Wuhan virus, tried to ruin Australia’s economy by slapping restrictions on iron ore, dairy products, barley and imposed high tariffs on Australian Wine. The war of words between the two governments and China’s despicable actions to force Australia to correct and apologize drove Australia to seek other states and build trade relations which would effectively negate the effects of the actions of the Chinese aggression.
When slapped with restrictions and tariffs on barley, the Aussies found themselves a respite in India. Chinese tariffs could’ve had led to $500 million losses every year. Thus, India, in February, for the first time opened up its markets to Australian Barley which will effectively set off the losses that it could’ve faced by the Chinese tariffs. Australia now plans to export 500,000 tonnes of Barley to India.
In addition, with rising Chinese aggression at the LAC in Ladakh, and increasing tensions with China, India roped in Australia and Japan to initiate discussions to launch a trilateral Supply Chain Resilience Initiative (SCRI) to reduce China’s foothold in the global supply chain.
Moreover, China’s decision to hurt Australian coal exports has emerged as an infliction for China itself. Australia is the world’s largest exporter of coking coal, which is used primarily for manufacturing steel and generating electricity. The Unofficial ban reduced Chinese imports of Australian coal from 76% in March to about 26%. China is the largest producer and consumer of steel and in the absence of cheap Australian coal; it is on course to suffer heavy consequences.
China is Australia’s sixth-largest trading partner; it is China’s fifth-biggest supplier of imports and its tenth biggest customer for exports. The recent pandemic coupled with Chinese belligerence on Australian imports to China should’ve adversely impacted the Australian economy, but it did not happen.
Australian rebound was led by a record surge in household spending which increased by 7.9% which accounts for a lion’s share in the GDP. The domestic spending coupled with Australian deepening ties with India and Japan has led it to a route of recovery as the economy surged forward in a year where every other state has posted negative economic growth.
Moreover, to give China a taste of its own medicine Australia is seeing a surge of boycotting Chinese goods. Moreover, the Australian businesses are determined to stand behind their government as Australian wheat producers refuse to deal with the Chinese markets as tensions keep rising.
The Australian wheat producers are holding back Australian wheat exports to China willingly as exporters say the risk of political entanglements has simply become too high. Brett Donoghue, the Export Manager for New South Wales-based grain marketer Agracom bluntly pointed out the refusal to deal in the Chinese markets as he said, “Obviously China is a big market but no one in their right mind would be selling to them and putting new business into that market because of what is happening with barley and other agricultural commodities,”
David Bassanese, Chief Economist at BetaShares said, “It was a slump in consumer spending that drove us into recession and it’s been a sharp rebound in spending that has led the way out.”
The Aussies have bounced back with easing corona restrictions and the Chinese have failed miserably in their task to hurt the Australian economy. The growth is a testament that the world can move forward without leaning on China’s supply lines.