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Escalating trade tension with China weighs on business

Maja Garaca Djurdjevic
Maja Garaca Djurdjevic
06 November 2020 2 minute readShare
Escalating trade tension with China weighs on business

Chinese media have hinted at an imminent suspension of several types of Australian imports from entering China, but experts are not expecting a widespread impact on Aussie small businesses if the ban does come to fruition.

According to China’s English-language The Global Times, the Chinese government has asked traders to stop purchasing at least seven categories of Australian products — from coal and sugar to wine and lobsters.

If implemented, this could mean more than $6 billion worth of commodities will not be allowed into China.

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Prime Minister Scott Morrison has referred to the news coming out of China as “speculation”.

“I simply note that is not what China has said they’re doing. China has denied that is what they are doing and I can only take that at face value out of respect for the comprehensive strategic partnership we have with China and to work through the channels that we have under that relationship to address the issues that have arisen,” Mr Morrison said.

 

Noting, however, that he was concerned, the PM said he would seek further clarity on those reports.

“Now, those issues are matters that the Trade Minister and I obviously have concerns about and are working closely with industry to pursue the appropriate channels within the relationship to seek to get some clarity and some resolution of those, but I simply note that what you’ve suggested is something that China has denied,” the PM said.

“And so that, you know, I can only refer you to what they’ve said they’re not doing. And on that basis, I will take that at face value and we’ll continue to work through the process.”

Lasting impact on trade

Speaking to MyBusiness, professor Brent Kaiser, acting director at the Sydney Institute of Agriculture, said that the disruption of free trade of select agricultural goods with China could have a lasting impact on how the two countries manage trade.

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“Australian producers and exporters will revisit long-term investment in China and seek opportunities where products can be sold elsewhere, or where existing production can be altered to meet more reliable markets,” Professor Kaiser said.

“Australia has a robust, agile and dynamic agricultural industry that trades extremely well on the quality and reliability of its products — this is unquestioned globally. Instability with major trading partners can provide opportunities for others to source our markets or, in the case of commodities, explore options for greater value-added opportunities within Australia.”

Addressing the possible consequences of the potential ban on the small-business sector, professor Hans Hendrischke from the University of Sydney Business School said that while this would depend on the type and industry of the SMEs, he is not expecting a widespread impact.  

“The trade bans affect exporters of raw materials and agricultural produce. More highly processed goods have not been affected and are normally not the target of bans,” Professor Hendrischke told MyBusiness.

“Australian SMEs in manufacturing and services industries have not been targeted by bans. They face very competitive markets in China, but political interference is not a major concern.”

Escalating trade tension with China weighs on business
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Maja Garaca Djurdjevic
Maja Garaca Djurdjevic

Maja Garaca Djurdjevic is the editor of My Business. 

Maja has a decade-long career in journalism across finance, business and politics. Now a well-versed reporter in the SME and accounting arena, prior to joining Momentum Media, Maja reported for several established news outlets in Southeast Europe, scrutinising key processes in post-conflict societies and enabling citizens to influence decision-making.

You can email Maja on [email protected] 

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