Two years ago, China imposed punitive sanctions against Australia. The results did not go as Beijing may have expected.

In 2020, the Australian government upset its largest trading partner by demanding an investigation into COVID-19 origin. In response, Beijing slammed sanctions on commodities from coal to barley, lobsters, and wine.

Australia’s trade balance for 2021 was $67.07 billion, a 28.58% rise from 2020. According to the Financial Times, its trade surplus in the second quarter totaled $28 billion. 

Michael Wesley, deputy vice-chancellor international at the University of Melbourne, said China’s sanctions have failed to punish the Australian economy. The country remained robust, and that was also thanks to China.

Wesley says, “The Chinese economy cannot wean itself off iron ore. It is a bedevilling situation for them.”

According to the Maritime Executive, China is the largest world consumer of iron ore, buying one billion tonnes of the mineral annually for its steel industry. While Australia’s main export is iron ore, in 2021, 80% of its resources went to the Chinese market. China continues to be its top customer.

By this time, the sanctions appeared to have only given Australia a push to lessen its China dependence.

China’s share of Australia’s export, as per the Australian Bureau of Statistics, has shrunk by 29.5% in the 12 months to this August. This was the first time it had fallen below 30% since October 2015. Likewise, more than a third of Australia’s exports are now going to South Korea, India, and ASEAN countries.

China’s hefty 175.6% tariff had battled South Australian wine producer Treasury Wine Estates in the mainland. However, the Financial Times noted that its Penfolds sales have prospered in Singapore, Hong Kong, and Taiwan over the past two years. The Financial Review says sales to Malaysia climbed by 55% to $59 million, while sales to Thailand increased by 95% to $53 million.

Infant formula producer Bubs, another Australia-based firm, has also enjoyed strong sales. Chair Dennis Lin believed their products were a staple in China, so that any penalty would harm the country more.

He said, “They might ban lobster, but you can’t ban infant formula.”
The Lowy Institute warned that Australia might still be vulnerable if China launches new measures. The Sydney-based think tank reminded that Chinese banks are still the primary source of financing for the nation’s coal industry.

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