IF THERE’S anything worse than running a huge trade deficit with China, it is, to judge by Australia’s incessant fretting, running a huge surplus. Australia’s was A$22bn ($17bn) last year—1.3% of GDP. China’s industrial revolution has long been fuelled by coal from Queensland and iron ore from Western Australia. But China wants ever more from Oz. Education, for instance: nearly 160,000 Chinese are studying in Australia. Food and drink is the next boom. Annual exports of beef will soon exceed A$1bn. Restaurants in Beijing and Shanghai can’t get enough Australian lobster. And sales of Australian wine to China were nearly A$500m in 2016, and growing by 50% a year.
So what are Australians worried about? Their country has escaped recession for an astonishing 25 years, thanks chiefly to Chinese demand. And Australia never had a big manufacturing sector to be hollowed out by Chinese competition. Yet nervousness is growing that Australia is somehow beholden to China, a feeling exacerbated by China’s testy reaction whenever Australia does anything that displeases it.
The testiness is especially acute when Australia appears to side with America, its closest ally...Continue reading
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