China’s scathing reaction to Australia’s nuclear submarine deal is unlikely to translate into short-term trade sanctions, experts say.
- Experts say China unlikely to hit back against AUKUS with trade sanctions
- But exports, including iron ore, could be at risk in the long run
- Other issues, like ownership of Darwin port, could spark further tensions
A day after Australia, the United States and the United Kingdom unveiled a new trilateral security partnership called AUKUS, China lambasted the alliance, calling it an “extremely irresponsible” threat that “seriously undermines the peace. and regional stability and intensifies the arms race ”.
This is the latest incident in a deteriorating relationship between Australia and its largest trading partner.
Previous tensions have led China to impose trade restrictions and sanctions on industries such as lobster, barley, wine and beef.
Perth US-Asia Center research director Dr Jeffrey Wilson said the latest spat was unlikely to lead to further action.
“Most of the ammunition has already been fired [because] China has applied trade sanctions to almost all of Australia’s major exports where it can, ”he said.
“In many [impacted] industries, especially here in Western Australia, trade is effectively suspended [so] it’s not likely to be much worse than that. “
Other potential sanctions targets could include international students and tourism, Dr Wilson said, but iron ore was probably not on the table just yet.
“The trade in iron ore (…) has not been affected largely due to its systemic importance to China,” he said.
“It would require an extraordinarily bad deterioration in relations – down to a ‘on the brink of war’ type scenario – before that starts to change.”
Repairing relationships won’t be easy
China’s previous trade sanctions were mainly in response to unilateral decisions, such as pressure from Australia for an independent investigation into the origins of COVID-19.
Lowy Institute China expert Natasha Kassam said this time there is strength in unity.
“China will hesitate to single out any of these [AUKUS] partners for reprisals and therefore maybe he will hold his own until another unilateral decision, “she said.
Potential future problems in Australia-China relations could include the upcoming review of Chinese ownership of Darwin’s port.
China would also be angry if the new powers of the Commonwealth were used to shut down Confucius Institutes at Australian universities.
Meanwhile, Ms Kassam said there was little Australia could do to mend the icy relationship.
“Australia looks like it only responded to China’s coercive actions, but it is clearly not in the interests of both countries to have this level of animosity.”
This was in part because while Australia’s iron ore industry seemed untouchable at the moment, it wouldn’t be forever, Ms Kassam said.
“It is very clear that Beijing is planning to wean itself off from iron ore in the long term,” she said.
“There is very little incentive from Beijing to try to improve the relationship.”
The future development of Chinese demand for iron ore is not the only issue affecting the future of the Australian economy.
“Much of Australia’s coal and gas exports go to countries that have set net zero [targets] for 2050 or 2060, ”Ms. Kassam said.
“The iron ore industry needs to worry about China as a market, but it also needs to worry about climate change, carbon taxes and other restrictions.
“Ultimately, a sustainable approach will require significant changes in Australia and China is only part of that story.”