By now, we are all well versed in the gist of the pandemic we are currently living through. Well-versed might even be an understatement; over the course of the year, seemingly all news outlets have focused on the pandemic or subjects related to it almost exclusively. Majority of us have familiarized ourselves with the statement that it originated in Wuhan, China before spreading across the globe. This is a narrative that the Chinese government has attempted to vehemently deny over the last several months, offering alternatives and apparent evidence to deflect blame onto visiting American military troops. I digress. Whichever version you may believe, one thing is becoming clear: implying that it originated China has not fared well for those who did so. Just ask Australia.
Back in April, the Australian Prime Minister Scott Morrison announced that he will be advocating for independent investigators to enter China and shed some light on what really happened. This was swiftly met with economic policy threats on Australia’s beef exports as well as an increased tariff on its barley. More implicit actions have also been taken by China in this political tit-for-tat. Chinese students are being discouraged from studying in the land down under, and holiday-goers redirected, citing racism as the main factor. Diplomatic relations between the two countries seem to be spiralling even further as Chinese officials made the decision in June to give an Australian national the death penalty while being held on drug trafficking charges. Some may argue the timing seems rather odd considering he has been imprisoned since 2013.
Though it started off as a political disagreement, the effects are potentially significant to Australia’s economy. China is Australia’s largest beef importer, accounting for 24% of its total beef exports in 2019, according to reports produced by Meat & Livestock Australia. Beef exporting is a lucrative business in Australia, generating AUD $10.8 billion (€6.64 billion), which is understandable; Australian beef is a delicious piece of meat. But, even losing just half of its beef export with China can cost Australia a whopping AUD $1.05 billion (€646 million) in export revenue, and can put a sizable dent in its trade accounts.
Currently, the Australian Government of Foreign Affairs and Trade reports the country’s trade balance at a positive AUD $8.8 million (€5.41 billion). Why should we care about this number? Well, such a positive number comes with a variety of benefits, including an increase in demand and thus increase in value of the Australian currency in international markets. Creation of jobs and economic growth are also a couple welcomed effects. Losing business with China will come at a hefty financial cost, which will dampen the gains and should be avoided if possible.
The potential trouble does not stop there. The Sunday Herald reports that Chinese students form 60% of Australian universities international enrolments – a very profitable business endeavour given that each international student pays an expensive price tag of AUD $45,000 (€27,684) for a bachelor’s degree, with the number increasing the higher the education level. SBS states that Chinese students contribute up to AUD $12 billion (€7.38 billion) a year. Though this is less of a direct impact on Australia’s accounts, in my experience, less money is almost never a good thing.
Overall, the former allies’ spat can prove to be a catalyst of economic decline, especially in the middle of the Covid-19 pandemic where most countries’ economies had already been forced to come to a screeching halt and remain unstable up until today. Furthermore, impartial students are caught in the cross-fire. The situation is adding stress to Chinese graduates, who like the rest of us, are hoping to jump start a career in the “new normal”. Though easier said than done, the two should resolve this potential chain reaction in a tactful way. Resources and time will be more beneficial when redirected to more fruitful ventures. Or, if simply unavoidable, at least postpone this fight until stability has returned to the global stage.