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Highlights
- Harsh trade restrictions were introduced by China, with the aim to weaken the Australian economy.
- However, the trade restrictions backfired on China.
- US Secretary of State Antony Blinken taunted China in a conversation about a trade war with Australia.
A top US official has casually mocked China in a conversation about a trade war with Australia. The official remarked that China’s revenge has not gone as per their plan.
In 2020, When prime minister Scott Morrison questioned the origin of Covid-19, the relations between China and Austria soured. Since then, the import of wool, wine, wheat, timber, sugar, lobster, gas cotton, copper, coal, beef, barley, and iron ore has been on the target of China. The total worth of these products is around AU$20 billion and has been boycotted by China.
Harsh trade restrictions were introduced by China, with an aim to weaken the Australian economy, as China is the largest importer of Australian goods. Still, many Australian firms have announced record earnings, bolstering the economy. These facts grabbed the attention of US Secretary of State, Antony Blinken.
Blinken said in an interview that China wished to squeeze the Australian economy but clocked more losses than Australia. Thus, the trade sanctions have backfired on China’s economy.
How did the trade restrictions backfire on China?
Josh Frydenberg, Australian treasurer, pointed out that total exports have declined by approximately AU$5.4 billion during the year to the June quarter. He added that exports of the affected sector to the rest of the world increased by AU$4.4 billion. Therefore, the net loss of the affected industries was AU$1 billion.
Over the year, Japan and the US have evolved as the largest source of new investment in Australia.
The Resource and Energy Quarterly report highlighted, the last 12 months had been the best months in the Australian resource sector. It is expected to hit AU$379 billion in the 2021 financial year; a 22% increase increased from the previous year. The Department of Industry, Science, Energy and Resources added that the success of the resource sector was driven by the weaker Australian dollar and high commodity prices.
Image source: © Tanaonte | Megapixl.com
Blinken also acknowledged the potential of the Australian companies in diversifying their supply chains and markets.
The coal sector remained a star performer. After the ban on coal, AU$1 billion worth of market was affected. However, Australia was able to identify an alternative market, South Korea, India and Japan.
On the other hand, the Chinese economy struggled on several levels. Not only the economy was affected, but the quality of life was also affected.
Coal-fired plants are used for generating more than one-third of China’s electricity. After imposing a ban on Australia, China bought coal from a third party by paying a premium price. Also, the steel mills of China are paying extra for getting hands-on coals.
Blinken pointed out that ‘China disrupted their own supply chains.’ They are now facing energy and food-related issues.
