China’s agents of influence peddle decoupling drivel

Via The Fake Left:

China’s widening trade actions against Australia have disrupted exports worth up to $19bn a year, according to new analysis, sparking calls for the Morrison government to seek a reset in the relationship to forestall further economic pain.

Labor’s agriculture and resources spokesman, Joel Fitzgibbon, said: “How much more harm must our economy suffer before Scott Morrison admits to his mistakes, swallows his pride, and puts an appropriate level of energy into fixing our relationship with our biggest trading partner?”

While it is difficult to quantify the cost of the trade war, research by the Perth USAsia Centre at the University of Western Australia shows the total value of exports to China from the seven industries affected by declared and undeclared sanctions was $47.7bn last year.

And another from Adam Triggs, Director of Research at the Asian Bureau of Economic Research at ANU and a Non-Resident Fellow at the Brookings Institution:

Why would politicians pursue such a strategy? One reason is that there is an increasingly popular belief that Australia could scale back its relationship with China without suffering a substantial economic cost. How? The argument can be summarised in single word: diversification. By shifting its trade and investment away from China towards other countries, Australia could kill two birds with one stone: not only would we be less reliant on a troublesome China, we could do so without the cost to the economy.

The first problem is scale. At least sixteen of Australia’s export industries get more demand from China than from the rest of the world combined. To put it another way: for the rest of the world to replace the demand coming from China in those industries, every country in the world that buys from Australia would need to double their Australian imports for us to merely break even from the loss of China.

These aren’t insignificant industries, either. One of them is Australia’s iron ore mining industry. The only way demand from the rest of the world could fill a gap as large as 83 per cent (for iron ore) or 79 per cent (for wool) would be if prices collapsed catastrophically, sending Australian producers into bankruptcy and Australian workers to JobSeeker. For these industries, diversification is synonymous with liquidation.

The final retort in the diversification argument is that Australia is simply making the wrong things. Australia should stop making what China wants and start making what the rest of the world wants. This is a recipe for a much poorer Australia. Australia’s businesses and households made China our major trading partner. They did so because that’s where the money and the demand is for the things they make. Using subsidies, tariffs or any other measure to make Australian businesses and households switch their production in favour of the products preferred by politicians and bureaucrats would be economically catastrophic.

No matter how you cut it, diversifying away from China is far from costless, and suggesting otherwise is dishonest. When so many Australian jobs, businesses and livelihoods are on the line, Australians deserve better.

What…like a bit of CCP arse-kissing? Do Australians deserve that as the CCP routinely insults them, bribes elites, bribes pollies, ruins universities, conducts lawfare and cyber attacks, lies about the virus while siphoning off PPE, crushes HK, commits cultural genocide in Xinjiang and arms the South China Sea? Are Australians to cop that sweet then?

Nor do these arguments pass scrutiny. Nearly all of those commodity volumes will get shipped anyway. Certainly at lower prices, initially. But, over time, those lower prices will capture market share elsewhere, especially since China will have to import displaced Australian volumes from somewhere else leaving other importers short. We are already seeing this process get underway in barley and coal.

On travel, sure, we’ll lose. But, again, only initially. If the blow is material then the AUD, tourism and education prices will fall and we’ll pick up more market share elsewhere over time.

Iron ore is atypical. China can’t displace it anyway. Longer-term, nothing can save the iron ore price anyway as China goes ex-growth.

In short, Chinese demand is not disappearing from the face of the earth. Any attempt to shift it from Australia only opens up holes elsewhere for us to fill.  That’s commodities for ya. They’re fungible.

Of course, decoupling is not costless. But it is nowhere near as expensive as the dumb, gawking figures quoted in these pieces. Meanwhile, the dividend of decoupling is that we’ll be less at risk of economic coercion from the world’s most egregious tyranny, which is obviously a price worth paying given the degree to which the CCP has attempted to occupy Australia’s political economy in recent years. For instance, Joel Fitzgibbon’s corrupt record. Notice, as well, that these thin-sliced analyses come from the tertiary sector which is one of those now utterly beholden to the CCP dollar.

I humbly suggest that these views, which are both intellectually flawed, as well as indirectly (if not directly) CCP-funded, should have no part in the Labor policy platform unless it wants to be in opposition forever:

David Llewellyn-Smith

Comments

  1. So the biggest AU export sector to China is travel; e.g. Chinese tourism in Australia? So if Chinese travel, coal and education exports disappear the AU hit is AUD 41 billion? Let’s prepare for that ….

    Proponents of appeasement to China apparently are prepared to tolerate abuse to us and others just for economic gain; that’s economic prostitution.

  2. Shades of MessinaMEMBER

    If Chinese students don’t come then 2-3 unis shut up shop, merge and/or academics/administrators can’t fly around the world Business Class anymore. Big deal, too many of them anyway and would probably be a net gain for the country.

    Would love to see an analysis on how much of the tourism dollar is run through Chinese owned businesses which is then funneled straight back offshore again. It’s probably about as impactful as cruise ships when they stop in Australia.

  3. Luca BiasonMEMBER

    It’s fascinating to see the continuing dissonance of those arguments, as if the proposed trade benefits could be split and removed from what the full package actually entails in terms of influence and – effectively – perpetual submission to the will of an authoritarian power with which – in the current state of CCP affairs – we share very few to no values.

    • I agree, however just a small note that geopolitical alliances are often referred to being about shared interests vs.shared values.

      And that way you can get around any pesky ethical dilemmas and avoid socially & politically unpalatable topics of conversation.

      • Luca BiasonMEMBER

        Absolutely, and am under no illusions re the many hypocrisies that fall under the umbrella of shared interests, often rebranded by those ‘who live in the real world’ as ‘necessary evil’ to kind of coat them in sugar or provide some kind of justification. But this relationship as envisaged by the CCP (with the completely unbiased blessing of a number of our own economists/academics) would be squarely in conflict with our national interests and security, let alone our values and – ultimately – sovereignty, a bit beyond the simple boundaries of difficult conversations.

  4. Australia will get hurt and for no good reason if this ridiculous anti-chinese campaign continues. We do not have an “existential” threat from China and we cannot really replace them. Our “existential” threats are home grown – manipulation of the various political “narratives” by the mainstream media family, corruption (everywhere), reds under the beds ( Is B.A Santamaria still around?). All of this will keep the ALP out of power federally for decades which is probably the main object of this wicked scheme.
    China is a friendly country as far as Australia is concerned, not perfect, but we will need them more and more when the US does its pivot back to North America.

    • “China is a friendly country”

      Tell that to the Australian citizens they’ve kidnapped over the years, or the Australians of Chinese extraction the CCP intimidates via threats to their families in China.

      The CCP is this generation’s Nazi party, and Labor appears to want to follow Neville Chamberlain’s example

      • Australians going to China have not always had the purest of motives. Roger Faligot in his book “Chinese Spies” mentions in passing the habit of the Australian security services recruiting Australian travellers to do intelligence gathering work in China. Apparently this use of travellers is quite extensive and has been going on for a long time. And there is corruption….It’s worthwhile to keep a perspective on Australians getting into trouble overseas.

    • Australia will get hurt but for no very good reason if this ridiculous excellent anti-chinese campaign continues.

      Different smokes for different blokes, I reckon.

    • PaperRooDogMEMBER

      Right about Australia bout very wrong about China. CCP has to control the narrative, it’s the only way the CCP can stay in power, it can’t tolerate anyone going against it’s beliefs, or even having beliefs that might possibly mean people don’t agree with the CCP, this is what destroying f alun gong, Uyghurs, treasure unions etc is all about. Then look at the CCP actions against it’s neighbors like India, invading & claiming the SCS etc, there is clear evidence they are anything but friendly & are expansionist military power, the evidence is clear! Sure they haven’t bombed us or moist countries yet but that is only as they are not yet in a position to without suffering decent sized loses or trade embargoes, or worse enable the Chinese people to rise up against the CCP internally, why bother with that when your insidious “firm” power will do the job eg take control of UN, UNHR etc

      So China under Xi is very much a threat to our future.

      • The achievements of the CCP in China have been spectacular and the party enjoys the support of about 93% of the population at large. (Harvard? American surveys). As I moved around China I noted the amount of disagreement with Central Government policy usually expressed by loyal CCP members. Most folk know how to get access to all sorts of electronic media which is usually more rational than much of what is seen in Australia. ( I had no problem getting MB and AFR)
        India according to the Chinese version of events provoked a war back in the early 1960’s and received an embarrassing thrashing. The Chinese advanced into India but withdrew after they made their point. When asked why they did not continue their advance to Delhi the Chinese reply was “What would we do with it?” (Chen Yi). India is controlled by an Hindu Nationalist party whose political ancestor was responsible for the Gandhi assassination. Australia’s new best mate? Really. Do a bit of research on that one.
        The Falun Gong now bigger and better and with American funding seem to be a key source of information for the Australian narrative. This is understandable as there are very few people of non Chinese background who speak Chinese – about 150 according to a AFR article. Little wonder these horrific tales some about two decades old and long investigated and discredited are able to be recycled and fed to a credulous Australian public.

  5. Australia was a great place to live before it had anything to do with China. There’s a BS narrative going that we somehow owe our standard of living to them.

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