The Australian treasurer will declare the economy has suffered a much lower than expected impact from China’s trade actions, while saying the country has faced political pressure from Beijing “more sharply than most other countries”.
Josh Frydenberg will use a speech on Monday to say that China, Australia’s top trading partner, is increasingly “willing to use its economic weight as a source of political pressure” but the Australian economy has shown “great resilience to date”.
Speech extracts distributed in advance show Frydenberg will say many of the firms and industries targeted by China’s trade restrictions have been successful in redirecting goods to other export destinations.
“Of those goods targeted by trade actions, our total exports to China are estimated to have fallen by around $5.4bn over the year to the June quarter,” he will tell the Australian National University’s Crawford Leadership Forum.
“But over the same period, exports of those goods to the rest of the world have increased by $4.4bn.”
Those figures imply a $1bn net hit to the affected sectors over the year to the June quarter.
Frydenberg will say he is “not downplaying the impact of China’s actions”, acknowledging that they “have hurt specific industries and regions, significantly in some cases”.
But he believes the “relatively modest” overall impact on the economy may be “surprising to many”.
Over the past year and a half, Beijing has rolled out tariffs and other trade actions against Australian export sectors including barley, wine, seafood and coal, with Chinese officials arguing the Australian government “bears full responsibility” for the breakdown in the relationship.
Australia has launched challenges through the World Trade Organization against two of these measures: the hefty tariffs on Australian barley and China’s imposts on Australian wine.
In both of those cases cases, China has argued the tariffs are justified by Australia “dumping” products at low cost on the Chinese market and propping up the sectors with unfair subsidies – claims Australia denies.
China has also blocked ministerial-level talks, amid a souring of the relationship over a range of issues, including Australia’s early public calls for an international investigation into the Covid-19 origins and its criticism of China over the crackdown on dissent in Hong Kong and human rights abuses in Xinjiang.
In Monday’s speech, Frydenberg will say the Australia is “on the frontline” of growing strategic competition between China and the US. He describes China as “more confident and assertive”.
The treasurer will say almost 130 countries now have China as their largest trading partner but “Australia is facing this pressure more sharply than most other countries”.
Frydenberg will say that China’s “grievances” against Australia cover “everything from our foreign investment laws to our willingness to call out cyber attacks”.
“We have remained steadfast in defending our sovereignty and our core values, and we always will,” he will say.
Frydenberg says Beijing’s trade actions carry a cost “to both Australia and China”.
“They rob Chinese consumers of premium Australian wine, seafood and other goods, and they rob Chinese industry of high quality and high value inputs, such as Australian coal.”
He will urge businesses to “be aware that the world has changed” and be mindful of “greater uncertainty and risk” – a message to diversify their markets and not be overly reliant on any one country, such as China.
The former finance minister Mathias Cormann, now head of the OECD, will also address the ANU event on Monday and will focus on global tax reform.
In a video message recorded in Paris, where he is now based, Cormann will say it is “very important that we ensure that large multinational digital businesses and all large businesses, in fact, pay their fair share of tax in the markets in which they operate and generate their profits”.