Jane Golley is one of those career China folks that never saw today’s tumult coming. As a result, she appears to confuse her career prospects with those of the Australian economy as we enter our post-China era. Via the ABC:
What an amazing ABC News appearance by ANU China in the World chair Jane Golley.
“There is simply no alternative to China … shifting away from China will bring poverty.” CONSUME AND OBEY WHAT THE TV TELLS YOU CITIZEN. DO NOT DISCUSS GENOCIDE pic.twitter.com/shDMgqUp6X
— Drew Pavlou 柏乐志 (@DrewPavlou) March 13, 2021
This is ridiculous. Even if China slaps tariffs on every Australian export, its demand is not leaving the global economy and it will still need masses of commodities. Because most of our exports to China are commodities, which are fungible, any blocked Australian volumes will simply go elsewhere, often into supply gaps left behind when China buys from others.
We have already seen this playing out in barley and coal. It will happen in all impacted markets. Thus, the damage is short-term and washes out over a year or two as a new trade equilibrium is found.
Some other areas, such as services exports, are more vulnerable to short-term damage. It’s not as easy to quickly replace the demand for education and tourism. But, if the damage is macro in scale, as Golley suggests, then there are automatic offsets that will also repair the economy quickly. These include lower interest rates, more fiscal spending, and, crucially, a lower Australian dollar which, obviously enough, would bring in more tourists and students from other markets as competitiveness lifted.
Sure, there would an adjustment period of a few years (depending on how big is the tariff hit) but there is absolutely no reason to conclude that mitigating trade dependence on China will result in “lower growth and higher unemployment” over the medium and long term.
To suggest such is classic partial analysis, the bane of public interest discussion most often disseminated by single-interest academics and lobbies, like Jane Golley.
