Australia is heading for a severe economic shock — just at a time when the country is least able to afford it.
The Chinese Government has either placed bans on, or impeded, exports from Australia of coal, copper, wine, lobsters, cotton, wheat, sugar, barley and timber.
China knows it can inflict mortal damage on an already COVID-19 battered Australia, it being Australia’s largest trading partner with bilateral trade in 2019 totalling $252 billion.
China has clearly set out to wage economic — and psychological — warfare against Australia because it had the temerity to demand an international enquiry into the origins of the coronavirus pandemic that has devastated much of western Europe and killed more than 200,000 people in the United States.
Moreover, we have been working with the US in terms of a critical minerals strategy (to loosen China’s grip on rare earths and others) and opposing China’s heavy handed intrusions in the South China Sea.
Beijing not pulling its punches
On Thursday the pressure was ramped up further.
“Canberra only has itself to blame”, was the headline on a China Daily editorial.
It attacked Prime Minister Scott Morrison for “his government’s rash participation in the US administration’s efforts to contain China”.
China Daily said Australia had undermined previously “sound and mutually beneficial” ties by “baselessly” sanctioning Chinese companies (presumably Huawei being banned from our 5G network) and “aggressively sending warships to China’s doorstep”.
The editorial warned that Australia would “pay tremendously” for its misjudgement.
“With Australia mired in its worst recession in decades, it should steer clear of Washington’s brinkmanship with China before it is too late.”
The communist government’s mouthpiece concluded by warning that if Australia did not come to heel (our words, not its), it would be “a decision Australia will come to regret as its economy will only suffer further pain as China will have no choice but to look elsewhere if the respect necessary for cooperation is not forthcoming”.
Note that phrase, “the respect necessary”: in other words, do what we’re told.
Harsh actions, brutal words
The moves from Beijing have been harsh in terms of the economic wounds being inflicted on Australia, from cutting our barley farmers off from their largest market to leaving 21 tonnes of live lobsters to die at Shanghai’s airport when customs officers refused clearance.
The moves have also been accompanied by brutal language, the like of which has not been heard since the 1960s when the Maoist regime used terms like “paper tiger” and “running dogs” to describe the US and its allies.
In April, Chinese ambassador to Australia, Cheng Jingye, mentioned wine, tourism and education as areas that his country would boycott if Australia did not give up demands for a virus investigation, boycotts that he said would inflict a staggering blow to the Australian economy.
And the story went around the world when Hu Xijin, editor-in-chief of the Global Times state-owned newspaper, likened Australia to “chewing gum stuck on the sole of China’s shoes. Sometimes you have to find a stone to rub it off”.
On Wednesday, that news service was at it again.
“Australia nervous at losing Chinese market”, was its headline.
Australia will pay “an unbearable price”
It quoted former Australian ambassador to China Geoff Raby saying that the complementarities between the two economies “are so profound that Australia’s economic dependency on China will not change” unless Australians choose to accept a major cut in their living standards.
And, as if the message was not already clear, the Global Times this week also quoted Chen Hong, director of the Australian Studies Centre at the East China Normal University in Shanghai.
Mr Chen accused Australia as being the one to sabotage bilateral relations and if Canberra continued to do so “it will pay an unbearable price”.
“There is no substitute for the Chinese market for Australia — but for the Chinese people, Australian goods have many alternatives.”
The service also quoted another academic saying that “being a mouthpiece for US aggression against China will cost Australian jobs”.
Well, at least we know where we stand.
Not only will the loss of these exports devastate whole industries in Australia (China is the biggest buyer of our barley, worth $1.5 billion a year), they — deliberately — are intended to cause fear.
The trade war follows other provocations.
There is deep concern about the level of cyber warfare which has been described as coming from a “state player”.
Australia vulnerable to military action
This development comes against a background of rising Chinese military strength in East Asia and military weakness among its neighbours.
For example, Australia will not get the first of its new submarines until the 2030s and the last of them until the 2050s.
Moreover, they are to be powered by diesel — while Australia needs to import oil and oil products through shipping lanes that could easily be blockaded by a powerful foreign navy (and a situation to be made worse by the closure of refineries in the country).
On the political front, it seems that the one politician willing to stand up to Beijing, Donald Trump, is about to suffer defeat and be replaced by a president who is expected to be “soft” on China.
Mr Biden turns 78 this month and an even more left-wing Kamala Harris is just a heartbeat away from the presidency.
Australia is about to be alone as it faces up to China.
The Morrison Government in Canberra has so far handled the issue adroitly: it has not yielded to the threats and, at the same time, been careful not to inflame the situation further.
Australia in danger of being “vassal state”
However, former speaker of the House of Representative (and now out of politics), Bronwyn Bishop, has the freedom to state what, to many in Australia, may well seem obvious.
She argues Australia has, to some extent, brought this upon itself.
“The bottom line is, we put ourselves in this mess because we were prepared to take cheap goods [from] slave labour,” Ms Bishop said this week.
Australia has to tighten its belt and forgo these cheap products and being dependent upon China to supply them, she argued.
“We have to realise that the alternative is to become a vassal state,” she said.
Australia’s Federal Government has plunged the nation into enormous debt as it tries to cushion the effects of the COVID-19 with billions borrowed and spent to subsidise wages and support industries.
The tourism industry has largely disappeared; there are only a handful of international flights arriving at Sydney Airport each day, and most of them with restricted passenger loads, while the Sydney-Melbourne route, which before the COVID-19 pandemic was one of the busiest air corridors in the world, is now down to two flights each way most days.
Trouble brewing for months
China has been clever in trying to avoid problems with the World Trade Organisation (whose rules are clearly being violated).
Nothing has been put in writing — with coal and copper, the word went out unofficially to not buy from Australia. Chinese companies, and especially state-owned ones, got the message.
This has been brewing since May.
Then, four abattoirs that exported red meat products to China were banned from shipping any further consignments to China.
Until then Kilroy Pastoral, JBS Beef City, Dinmore and the Northern Co-operative Meatworks at Casino, NSW, had accounted for 35% of Australian beef exports to China.
This followed the punitive tariff placed on barley threatens to deprive Australia of another $1.5 billion in export income.
Mongolia replacing Australia as coal provider
Last month China told some of its state-owned steelmakers and coal-fired power plants to stop importing Australian coal with immediate effect.
Among the utilities given instructions to look elsewhere for thermal coal were Huaneng Power International, Datang International Power Generation and Zhejiang Electric Power.
It has been reported by the South China Morning Post this week that Chinese steel mills and power stations have started buying more coal from Mongolia after Beijing imposed a ban on imports from Australia.
Coal from Mongolia, which borders China to the north, is the most obvious replacement for Australian coal, the paper reported.
It is also being reported that some Australian winemakers have now suspended shipments to China fearing that they will not be allowed entry.