The paper highlighted today is a useful run through of what China just did to Australia in terms of upending trade in certain vulnerable products. Vulnerable because in all cases they’re homogeneous and substitute-able.
In the past Australia sold mostly iron ore and coal to China and in those cases the products were/are of high quality and difficult to source elsewhere.
Victor Ferguson and Darren J. Lim, both of the Australia National University, suggest (but don’t say it out loud) that Australian politicians have fluffed-up the China engagement because they failed to notice how the Australian economy has progressed from a pure commodity exporter to a higher value-added service oriented supplier.
China, by targeting barley, beef, tourism, education and wine is very smartly stressing industries that create political problems for the Australian government without causing reciprocal inconvenience at home.
The researchers conclude that a response should include cooperation with similarly vulnerable regional economies like Japan and Korea. Hmm…
My more worldly take on this would be to note if you wish to sell to China don’t be noisily rude about the place or go out of your way to pull their tail for no real benefit to yourself (problems really took off when Australia demanded [‘Demanded’? Ed.] an inquiry into COVID-19/Wuhan in April Australia ‘demands’) .
That’d be much easier and more desirable for all concerned than getting together with Korea and Japan to thrash out a common policy to do what exactly? Er, not sell stuff to China?
The short read (11-pages) is available in full at the following link Australian Economic Vulnerability.
Happy Sunday and Happy New Year. We’re going to have a great one!