US media: Australia's economic recovery cannot do without China

The CNN website published an article on December 2 that Australia is out of recession and now it needs to avoid a trade war with China. The full text is excerpted as follows:

Australia's economy is growing again. Previously, the new crown epidemic caused its first recession in about 30 years.

Now Australia must keep its unstable economic recovery on track, while also dealing with the deteriorating relationship with China, its largest export market.

The Australian Bureau of Statistics said on Wednesday that compared with the previous quarter, the Australian economy grew by 3.3% in the third quarter.

The tension between Canberra and Beijing may cast a shadow over Australia's recovery. Australian Treasurer Josh Freidenberg told reporters that the dispute with China is a "very serious situation."

He said: "China is our largest trading partner. Many Australian jobs depend on trade." He also said that Australia is trying to reach free trade agreements with other partners in the world, including the European Union, to reduce risks.

At the same time, economists say that the current trade dispute has not escalated to the point where it poses a real threat to the Australian economy.

A full-scale trade war with China will be devastating for Australia. The world's second largest economy is Australia's largest trading partner. In 2018, the trade volume between the two countries was approximately US$158 billion. Researchers from the University of Western Australia and the Australian National University say that if trade between the two countries is almost completely stopped, Australia's gross domestic product (GDP) will fall by about 6%.

Oxford Economic Consulting wrote in a report last month: "Any deterioration in trade relations is disturbing." In 2019, exports of goods and services accounted for 22% of Australia's GDP. About one-third of them went to China.

The trade dispute has severely disrupted some industries: Australian wine producers have accused the recent tariffs of being devastating, and they have been forced to find new buyers in the United States and Europe.

Hans Hendrickske, an expert on Chinese business and management issues at the University of Sydney, said: “Currently, China’s trade ban targets some of the pain points of relatively small export sectors, such as wine and beef. These industries may Suffered heavy losses and was even forced to reorganize."

Among Australia's export products, mineral resources dominated by iron ore account for a much larger share. Economists at Oxford Economics pointed out that last year, about 68% of the raw materials exported by Australia went to China.

Sean Lankek, one of the authors of the report, said that given the extent to which China's steel industry relies on these products, such restrictions are impossible.

Although China has not formally announced restrictions on Australian mining, there are already some signs of tension. Australian media reported last month that coal worth hundreds of millions of dollars was shelved along the coast of China. Although coal is not as important as iron ore, it is still an important export product of Australia to China.