Australia-China Escalating Tensions Upsurge- Grim Times Ahead?

Myriad factors play their respective roles to make relations between two countries cordial- a shared goal, dedicated governments, effort, compromise, and give and take along with a sense of compensation and apology if required.

As good as the crux of good relationships between countries sounds, it is no doubt a sensitive and difficult task to manage. History has proof that trade wars and ill-relations have occurred between countries (US-Iran, US-Russia, India-Pakistan the list goes on).

Since 2018, the US-China trade war has been one of the major macro event that has taken a toll over relationships of not just these two countries but has had global ramifications as well. More recently, amid the COVID 19 pandemic turmoil, two countries seem to be in an escalating verbal tit for tat relation showing signs of terse times ahead- Australia and China.

Escalating Tensions Between Australia & China

Australia called for an independent international inquiry over the origins of the ongoing COVID 19 pandemic, which reportedly has its epicentre in Wuhan City of China. The request came in right when a lot was already happening pertaining to the coronavirus origin- for instance, the Donald Trump administration hinted on cutting off support to the World Health Organization (WHO) for fawning to China. Moreover, the US reportedly pursued restitutions from Beijing for pandemic-related losses.

Australia’s move was looked upon as an additional push to the WHO towards inner reforms to concentrate on allegations of a possible pro-China bias. Australia’s intent was clear- given the extraordinary implications and impacts of the coronavirus, it seems entirely reasonable and sensible that the world should have an independent assessment of how this all came into existence. Not only will it give clarity to the current situation but better place us from preventing something like this from occurring again.

China, which has already shown its intent to handling and exchange of information over COVID 19, did not seem to be amiable to Australia’s demand. Some experts opine that given Australia and US share affable terms; China viewed this as a politically motivated action.

Bilateral relations between Australia and China hit even hard post China’s possible boycott of Australian products such as meat, wine, tourism, and services.

Let us comprehend the gravity of this better after understanding the bilateral relationship both nations share-

Australia and China Trade Relations

Australia-China engagement in business, culture, education, and science, brings substantial social, economic, and cultural dividends to both countries. Australia has been known to be largely phasing out bilateral aid to China.

China is Australia's main trading partner, accounting for 26% of Australia’s total trade that can be estimated at approximately $235 billion (2018-19). It is Australia’s largest single market for exports of wine, coal, iron ore, beef, education and even tourism.

In recent years, Chinese investment has expanded from primarily mining to include sectors such as agriculture, infrastructure, and services. As deciphered, Australia is a key supplier to China with Australian resources and energy powering a major chunk of China’s manufacturing construction and constituting to its overall growth.

On the other side, Australians have been progressively purchasing products from China via online shopping sites. Moreover, China is Australia's biggest source of foreign students, and in 2019, over 203k Chinese students reportedly studied in Australia. China also constitutes as Australia's largest inbound market in terms of total visitor spend and visitor arrivals.

GOOD READ- Commodity Supply Chain Disruption and Australia Export Position

Another Soaring Friction- US & China in a Tiff?

While the Australia-China wrangle over continues, China has exasperating terms with the only world economic superpower preceding it- the US.

Washington has taken a tough tack approach seeking better accountability and transparency for China’s part in the COVID 19 pandemic. Probably the only worst disaster to hit the US since the Pearl Harbor in 1941 and the 9/11 terror attacks on New York, the country tops the chart of COVID 19 confirmed cases currently.

The already strained relation has been on a rapid downward spiral amid the coronavirus outbreak which started as a verbal rift with China stating that the virus might have been brought to China by the US military, to which the US promptly responded that this was a false accusation.

In recent weeks, the Trump administration has repeatedly lashed out at China with questions pertaining to the virus origin and even stated a possibility that the virus originated from a Chinese lab, to which Beijing downrightly denied.

What started as a war of words seems to have dug deeper with The Trump administration reportedly will possibly draw up plans to go against China via sanctions, cancelling US debt obligations and drawing up new trade policies.

Where this leaves the implementation of the Phase 1 deal pertaining to the 2-year old US-China trade war will be an interesting turn of events!

The deteriorating relationships between these nations does hint towards disruption in the global diplomatic space. However, every nation is dedicated towards vaccine R&D and has been thriving to delve deep into the coronavirus concept to provide answers that the world has, at the best of their capacity. Consequently, this could lead to positive relationships between nations as interdependency and healthy trade relations will be integral to a welcoming global economic bounce back in a post COVID 19 world.

GOOD READ- World Economy: Australia, US and China’s Economic Growth