The Australian and Chinese flags are displayed in front of the portrait of Mao Tse-tung facing Tiananmen Square.
Frederick J. Brown | AFP via Getty Images
Australia’s economy has been hit hard by intensifying trade tensions with China, and growth could “never return” to pre-virus levels, even after the pandemic, according to research firm Capital Economics. There is.
China is Australia’s largest trading partner, accounting for 39.4% of commodity exports and 17.6% of service exports between 2019 and 2020, the company said.
However, Beijing has been targeting an increasing list of imported products from Downunder for months — tariffs on wine and barley and stopped importing beef.
Senior economist Marcel Tieriant said Australia’s gross domestic product (GDP) could shrink further if Beijing continued to impose tariffs on imports from Australia. Last week’s note..
Goods and services already on the “ignition line” are worth almost a quarter of Australia’s exports to China, accounting for 1.8% of economic production, according to research firms.
But that may not be the end.
“If China targets other products that aren’t heavily dependent on Australia’s imports, that number could rise to about 2.8% of GDP,” said Tieriant.
Bilateral relations between Canberra and Beijing deteriorated earlier this year after Australia’s support The need for international research is increasing To deal with the Chinese coronavirus pandemic.
Beijing could impose further restrictions, including exports of gold, alumina (a type of industrial material) and “a wide range of small items,” according to the report.
“Australia should be able to divert some of its cargo to other countries, but the intensification of the trade war is another reason why Australia’s economy does not return to its pre-virus route even after the pandemic has been curtailed.” Thieliant said.
According to Capital Economics, the country’s gross domestic product could fall about 1.5 percentage points below its pre-virus orbit at the end of 2022, and additional trade restrictions by China could further exacerbate the shortfall.
However, “Australia may find other export destinations,” the pain could be alleviated, economists said.
Australia is the world’s largest producer of iron ore and is another product that is gaining attention amid growing tensions between Australia and China.
But Australia has one bright spot. Given that half of China’s needs are met by Australia, iron ore exports will continue to be spared.
China imports 60% of its iron ore from Australia and relies heavily on the commodities used to make steel.
Analysts say the lack of alternatives available may be the reason why iron ore has escaped previous tariff disputes.
Iron ore prices have skyrocketed recently Demand from China increased and was even more excited by the supply cuts and turmoil caused by the storm that hit Australia.
“We believe that iron ore exports will continue to be spared … without Australia it would be impossible for China to procure all of its current needs,” wrote Tieriant.
Australian economy after the Covid-19 pandemic
https://www.cnbc.com/2020/12/29/trade-war-with-china-australias-economy-after-covid-19-pandemic.html Australian economy after the Covid-19 pandemic