The debate over Australia’s over-reliance on trade with China has heated up recently due to supply chain disruptions as China has frozen in response to COVID-19. This prompted Australia to conduct a national survey in late February to clarify "Australia’s economic vulnerability to external impacts". 

"The significant commercial dependence on China itself is not conclusive evidence that Australian businesses are irresponsible in risk management or that the country is overly dependent," said the researchers. Laurenceson and Michael Zhou write.

“Regarding exports, Australian businesses that are selling a lot of goods to the Chinese market will suffer the most if the market is disrupted. This becomes a strong motivation for businesses to seize both opportunities and risks, as well as take steps to mitigate risks, ”the report wrote. 

According to the study, some Australian institutions, such as universities, are the most criticized for their significant dependence on the Chinese market, ignoring national security interests. 

The growth of Australian universities - thanks to a large international student population - created more than  250,000 jobs in Australia in 2018, and other Australian industries such as wool also continue to grow well thanks to China. Quoc bought a lot. 

Expert Alfred Chung, working at research firm Alpha Consultancy, underscores the fact that Australia’s beef industry sells two-thirds of its products to China. 

As a long-term partner of the National Farmers as‌sociation of Australia, Mr. Chung said that the call to diversify markets outside of China was nothing but "the noise in Canberra" and a pat on the face of Australian agriculture. which has been damaged by recent severe drought and forest fires. 

"Politicians do not blame farmers, and it is a suicide to diversify the market right now," Chung said. 

“Farmers have practically sought to avoid dependence on Europe, the United States and Japan, and it has taken years for Australian leaders to gain Chinese trust in beef exports.

If we had to avoid the Chinese market from now on, Australia’s livelihood would be lost, ”Chung said. 

"The politicians say it doesn’t make sense because there will be very few markets for many businesses to create trust and a safe place to sell like China," Chung said. 

Beef and wool are among Australia’s major agricultural exports to China. Mining products such as iron ore, natural gas and coal are among the most exported resources to the world’s most populous market. In the service sector, education is the leading export product. 

China is Australia’s largest export market, accounting for about one third of total exports. Japan ranked second, but only accounted for 13/5. The US ranks fourth on the list, buying about 5% of Australia’s total exports. 
Robert Mackenzie, the fifth-generation boss of Maka Beef, an Australian beef exporter, said he sells all premium beef products to China, where demand is greatest. 

"I hope the two countries will maintain a successful relationship ... if this does not happen, many people will be hurt," Mackenzie said. 

According to the report, there is another way to manage risks in the supply chain instead of separating from China. The Government may take measures to encourage enterprises to increase reserves of important commodities or maintain strategic warehouses. 

Another way to increase self-sufficiency is through the industrial policy of "re-industrializing" the Australian economy, whether this initiative is without firm plans or contingency markets to replace China in the meantime. The transition will lead to a reduction in income and employment in Australia, the report writes. 

But the re-industrialization initiative also matters, according to Professor Hans Hendrischke, of the University of Sydney. 

The scholar believes it is useless to try to revive manufacturing in Australia, which saw its collapse when Holden Motor stopped production in October 2017 due to unprofitable operations. 
At its peak, Holden sold nearly 180,000 cars and hired 24,000 people. But it also costs a lot of tax, with a subsidy of more than A $ 2 billion being used to pay the General Motor manufacturer Holden hired for 12 years. 

“Separating is not an Australian option because we have no basis to do that, we don’t have a trade deficit, we have a trade surplus and that comes from trade with China. We don’t have to compete with China in terms of industry like the US or Europe and Japan to some extent, ”said Hendrischke. 

"The situation here is also different from the US, because Washington has a lot of motivation to separate," Mr. Hendrischke said. 

According to the researcher, the best thing Australia can do is to promote "smart" manufacturing, but still need to import machinery from China.

According to researchers Laurenceson and Zhou, Australia is generally not "divorced" from China economically, even if it has to compete with Beijing for national security goals. 

“There are important discussions about managing risk from Australia’s dependence on the international economy, especially in the face of challenges such as COVID-19 ... but it is advisable to put aside the argument that Australia’s national interests are best served when separated, ”concludes the report by Laurenceson and Zhou.