China Threatens Economic Action Against Australia

Updated: Jun 8

Less than two weeks ago, the Intelligence Ledger published a report on the People's Republic of China's (PRC) strategic objectives. In it, special attention was given to the potential use of economic coercion by the government in Beijing against Australia if the two nations interests were to clash. Today, that prediction has come to fruition. According to Australia's Sky News, China's Ambassador to Australia, Cheng Jingye, has threatened severe economic consequences if Canberra were to proceed with an investigation into Beijing’s early handling and response to the COVID-19 pandemic. Jingye declared such a probe would be "dangerous" and could result in a Chinese consumer boycott, with central government support, of both tourists visiting the nation and merchandise.



Australian Foreign Minister Marise Payne was quick to respond to the threat, "We reject any suggestion that economic coercion is an appropriate response to a call for such an assessment, when what we need is global cooperation. Australia has made a principled call for an independent review of the COVID-19 outbreak, an unprecedented global crisis with severe health, economic and social impacts." She further noted, "A transparent and honest assessment of events will be critical as we emerge from the pandemic and learn important lessons to improve our response in the future."


The threat highlights the reality that Australia is deeply reliant on the PRC for a successful economic outcome. As China's economic growth rocked in the late 1970s, Australia was well positioned to both meet demand and serve as a market for Chinese goods. Today, the PRC is Australia's largest trading partner in both exports and imports. According to the Australian Parliamentary Library Briefing Book, nearly 25% of Australia's manufactured imports come from China, while 13% of its exports are thermal coal to China. Its trade relationship with the PRC dwarfs any other partnership with any other nation.



This gives the People's Republic an immense amount of sway over the Australian government. While the United States possesses the military, free-market, and technological savvy needed to resist Chinese influence, Australia finds itself in a much more susceptible position. In a 2019 report on how slowing economic growth in China would impact the Australian economy, Australia's Reserve Bank predicted that, "a sizable decline in economic activity in China is likely to decrease Australian economic growth, through lower exports and investment, raising unemployment and putting downward pressure on prices." Now take the scenario of an economic slowdown, and replace it with a diplomatic spat. If the Chinese government simply halted trade with Australia, or placed well targeted sanctions on the democratic nation, the situation would be near catastrophic.


To date, COVID-19 has sickened nearly 2,970,000 people worldwide and resulted in the deaths of 205,000.


The views expressed are those of the author and do not reflect the official policy or position of the United States Army, Department of Defense, or the United States Government.

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