The last few years have proven to be highly damaging to the trade relations between China and Australia. Previously, the two countries had strong trade relations with China being Australia’s largest trading partner. However, since 2015, the two countries have been embroiled in several trade-related controversies. The situation worsened in 2020 when China imposed tariffs on Australian barley, leading some experts to believe that the two countries are now engaged in a full-fledged trade war.
How the Trade Relations Have Deteriorated
The latest escalation of the trade war between the two countries started in mid-2020 when China decided to suspend beef imports from four Australian firms and chose to impose a high degree of tariffs on Australian barley. These tariffs were as high as 80%, causing significant damage to Australian producers. Although Australia has lodged several protests against them, China has not altered its decision.
There are two main reasons for this decision. First, when the Australian government supported a full inquiry into the origin of COVID-19, this angered China, who opposed the investigation. Secondly, the two countries have also been battling a diplomatic dispute. Australia has been accusing China and its diplomatic officials of meddling in the country’s political affairs, but China has continued to deny such accusations. Furthermore, Australia has banned Huawei, a Chinese telecom company, from its 5G network, due to security concerns. This ban has angered China even further, escalating the trade war.
So What’s Next?
If this dispute is not solved quickly, it could prove to be highly damaging for both countries. China is highly dependent on Australia’s natural resources, while Australia depends on China’s technology-related imports. Both countries must find a quick solution to their respective issues before the damages get irreparable.
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