FX.co ★ Australia extends losses in trade war with China

Nowadays, trade wars are not a rare thing. Each party is incurring losses albeit in different amounts. The trade conflict between Australia and China began when the latter slapped wide restrictions on Australian exports. So far, Beijing looks like a winning party as Australian exports to China has decreased by $ 4 billion.

The confrontation between the two countries started in the fall of 2020. Australian Prime Minister Scott Morrison called for a global inquiry into the coronavirus outbreak. Thus, he supported the theory about the virus leak from a laboratory in Wuhan. China was rather angered by his statements. Shortly after, China targeted Australian barley, beef, and coal suppliers. A bit later, Beijing raised tariffs on imports of Australian wine and barley to 218% and 80%, respectively. Australia has enjoyed a trade surplus with China. Therefore, with China being Australia’s largest trading partner, the Prime Minister's statements cost the country a pretty penny. For example, in the 2019-2020 fiscal year, exports to China exceeded $185 billion, which was three times more than with the second-largest partner, Japan.

However, Australians are not perturbed by China’s restrictions. Treasurer of Australia Josh Frydenberg said the country's economy had demonstrated incredible resilience. He noticed that indeed China’s tariffs on Australian commodities erased some money from the state’s coffers. They also hurt some industries and regions. However, according to official statistics, the overall impact on the economy was relatively modest. "Australia must diversify its economy to rely less on China. Heightened strategic competition is the new reality we face, now and likely into the future," Frydenberg noted.