China-Australia relations: ‘smearing China’ will backfire for trade partners, Beijing warns

·5-min read

China says it will not do business with countries that undermine it, while analysts say that any “trade alliances” to neutralise China’s trade actions will not work in a free global market.

Responding to a request for comment by the state-owned China News Service, which pointed to some analysts saying Canberra “should not blindly follow the US”, China’s foreign ministry said on Tuesday that countries which unjustly attack China would suffer the consequences, without elaborating.

“We will not allow any country to reap benefits from doing business with China while groundlessly accusing and smearing China and undermining China’s core interests based on ideology,” ministry spokesman Zhao Lijian said at a regular press conference, in response to the query. “When a certain country acts as a cat’s paw for others, it is the people who pay for misguided government policies. From what you mentioned in your question, we can see how such a practice has served the country concerned.”

Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team.

China and Australia have been at odds since April 2020, when Australia pushed for an independent investigation into the origin of the coronavirus without consulting Beijing. Disruption in trade between the two countries ensued as China imposed a series of unofficial bans on several products, including coal, lobsters, cotton and sugar.

China-Australia relations: how smuggled lobsters take ‘grey channels’ to Chinese plates via Hong Kong

Analyses by the South China Morning Post have shown that the United States shipped more coal to China in the first five months of the year, while China did not import any coal from Australia during that time.

As part of its phase-one trade deal signed with the US in January 2020, China committed to buying more American goods. As a result, China has imported more wine, cotton and timber from the US while restricting Australian imports.

While much lower than Australia’s iron ore exports to China – Australia remains China’s leading iron ore supplier – the US has also increased its monthly exports of iron ore this year, mainly in the form of pellets to China.

Zhao said that even though China has placed greater focus on its domestic market – part of Beijing’s strategic approach to adapting to an increasingly unstable and hostile outside world – it will still “unleash huge opportunities” for cooperation with trade partners. He also repeated a long-standing pledge to import more than US$30 trillion worth of goods in the next 15 years.

“That being said, mutual respect is the foundation and safeguard of practical cooperation between countries,” he said.

While there was no official response to China’s comments, Australian Treasurer Josh Frydenberg responded to an unrelated question on Tuesday about having to endure a long period of tension with China, saying China today was different than the China “seen in prior years”. But he reiterated that it was still an important economic partner for Australia.

“They [China] have made no secrets of the fact that our exports are not making their way to China – barley, wine, coal. But what is making its way to China, because they need it most, is our iron ore. And the price of iron is at near-record highs, and that is providing significant revenue into our economy both at a state and a federal level,” he said.

“But we will not put economic interests first; we will put the broader national interest first, and that means standing with a very clear and consistent sense of where our national interest is, and that is what we have done under Prime Minister [Scott] Morrison.”

The economic damage suffered by Australia had raised concerns among Western allies such as the US and Britain.

Last week, conservative British politicians and an American industrial lobby group called for the formation of a “Nato for trade” to counter China’s economic actions on its members.

China’s economic growth to cool at end of year, weighed down by slowing export demand as world recovers

The proposal does not have official backing, but it calls for democratic nations to create a trade-based alliance along the lines of the North Atlantic military grouping formed to counter the Soviet Union in 1949. Under Nato rules, members agree to defend each other, should they come under attack.

In the same ilk, a “Nato for trade” could see members retaliate against China, such as by restricting imports by Chinese firms if Beijing blacklists any of the group’s members.

But whether it would be pragmatic for democracies to unify on commercial issues is a matter of contention.

“The idea that governments will form a Nato-like coalition to counter China‘s trade measures is nothing more than fantasy,” said Bryan Mercurio, an international trade law professor at Chinese University of Hong Kong.

“Not only would group members have different domestic interests, none of them are state-led in terms of economic growth models … it would be a brave government, indeed, that tells farmers or other exporters that they can’t earn a living by selling to China due to some new form of solidarity between like-minded nations.”

More from South China Morning Post:

This article China-Australia relations: ‘smearing China’ will backfire for trade partners, Beijing warns first appeared on South China Morning Post

For the latest news from the South China Morning Post download our mobile app. Copyright 2021.

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting