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Is Australia’s trade war with China now over? The answer might be out of our hands

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Australia’s rock lobster industry can export to China again, ending a significant trade barrier. However, future relations depend on geopolitical dynamics between China and the U.S., warranting cautious optimism.

Finally, Australia’s rock lobster industry will be able to export to China again, following a deal struck on the sidelines of the ASEAN summit in Laos last week.

It will take some weeks to finalise the paperwork, but Chinese diners can expect to eat our high-quality crustaceans as we devour our Christmas roast turkeys.

The breakthrough brings a particularly nasty chapter in Australia-China trade relations to a close. Tariffs on rock lobsters were the only remaining major restriction of a raft of trade barriers imposed by China in 2020.

It might be tempting to celebrate, but we should tread carefully. Our situation remains hostage to Beijing’s relationship with Washington. Whether Australia’s trade woes with China are actually over may ultimately be out of our hands.

Read more:
China removes block on Australian lobster, in last big bilateral trade breakthrough

Australia’s reversal of fortunes

The past couple of years have been a whirlwind.

The Albanese government has seen China systematically undo the export restrictions it had imposed on Australia in 2020 – including on barley, wine, beef, and now lobster – without giving away much of substance in return.

Yes, Australia suspended two cases it had brought against China at the World Trade Organization, concerning barley and wine duties China had imposed. But those cases can be resumed if the Chinese government backslides.

China will resume imports of Australian lobster by the end of this year.
Abdul Razak Latif/Shutterstock

And true, the Albanese government did not oppose China’s bid to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership – an important regional free trade agreement of which Australia is a founding member. But neither did it endorse China’s bid.

It seems we’ve come a long way since 2020, when China tabled its infamous “14 grievances” against Australia. This deliberately leaked document publicly criticised Australia on a whole range of fronts, including foreign investment decisions, alleged interference in China’s affairs, research funding and media coverage.

A more sobering picture elsewhere

This reopening of trade might make it seem like things are looking up for Australia. In some cases, our business community has bounced back with gusto, notably wine exports to China.

Zooming out, however, paints a more sobering picture of global trade relations. In the near term, the decisions of our key allies – namely the United States – may come to matter more than our own.

The Biden administration has long hoped to place a “floor” under America’s geopolitical competition with China. Neither side wants things to get ugly.

But in Washington, strong bipartisan consensus remains that China must be confronted. The US has continued to take coercive actions against Chinese exports and investment.

For example, the US recently imposed a 100% import duty on electric vehicles produced by Chinese-owned companies. Similarly, it imposed a 25% import duty on imports of Chinese container cranes. Strategic distrust will escalate no matter who wins the White House on November 5.

This animosity is mirrored in Beijing. China’s security state is expanding ever more into business, while its private sector retreats. China’s own coercive activities are also escalating in regional disputes over the South and East China seas, as well as in its trade retaliations against Western markets.

Distrust continues to simmer between China and the US.
Doug Mills/The New York Times via AP, Pool

Widening tensions

These tensions are also playing out in Europe and the Middle East. International relations scholars worry that the West must now confront an authoritarian axis comprising Russia, Iran, North Korea and China.

China’s “no limits” partnership with Russia has spooked most European elites. Western sanctions on Russia, meant to erode the Kremlin’s war machine, are likely being circumvented by China’s unmatched industrial capacities.

Iran’s military support for Russia supplements the Kremlin’s war-fighting capacities at Ukraine’s expense.

Unsurprisingly, economic security concerns are rapidly eclipsing free trade considerations for the US.

Advanced manufacturing capabilities – such as semiconductor production – are increasingly important strategic assets.
genkur/Shutterstock

When US National Security Advisor Jake Sullivan introduced the 2022 National Security Strategy, he adopted a selectively restrictive approach he called “small yard, high fence”.

He was talking about export controls and inward restrictions on investment, applied to high-technology products.

Since then, the “yard” has grown wider, and the “fence” has expanded. More sectors and products are being thrown into the mix, from energy security, through critical minerals, to food production.

The challenge with digital technologies, able to be used for both military and civilian purposes, is that the yard can be very large indeed.

Middle power problems

The US has the economic and military weight to confront China. As the European Union is learning, having the economic weight is necessary. But being politically united is essential, and they remain far from that.

Australia is a middle power, without the necessary economic weight or military heft to confront China. That means we must support the rules-based multilateral trading system – preserving the authority of institutions like the World Trade Organisation (WTO) – to constrain the actions of the great powers and preserve as much of our open trade posture as possible.

Australian Prime Minister Anthony Albanese attended the ASEAN Summit in Laos last week.
Rungroj Yongrit/EPA

Washington, however, increasingly expects its allies to fall into line. How else can one explain Canada’s decision to follow the US and impose 100% import duties on electric vehicles produced by Chinese owned companies?

Like Australia, Canada is also a middle power. It is also a strong supporter of the rules-based multilateral trading system. But Canada’s action violates WTO rules.

The fact that Washington’s actions also violate these rules is taken for granted these days.

Australia must pay attention

Global trade cooperation is deteriorating, and the world is fracturing into two “values-based” trading blocs. While there could be positive upswings in our bilateral trade relations with China, the medium term trend is down.

As Napoleon Bonaparte is reputed to have said:

China is a sleeping giant; let him sleep, for if he wakes he will shake the world.

China has changed, and the world with it.

Australian business needs to pay attention. Our East Asian partners, notably Japan and South Korea, have long spoken of the need for a “China plus one” (or more) business strategy – making sure trade and investment is diversified into other countries, as well.

Such diversification will be increasingly important in the years to come.

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Business

CCPIT Reports 90% of Foreign Firms Surveyed Are Satisfied with China’s Business Environment

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China Council for the Promotion of International Trade (CCPIT) held a press release in Beijing on October 31. (Photo:Zhang Yiyi/GT)

A CCPIT survey reveals 90% of foreign firms find China’s business environment satisfactory, with growing optimism and increased investment plans, particularly among European companies, primarily in eastern regions.


Positive Business Sentiment in China

The China Council for the Promotion of International Trade (CCPIT) recently reported that 90% of surveyed foreign enterprises consider China’s business environment "satisfactory" or better. Their findings, shared during a press release in Beijing on October 31, revealed rising optimism among European and U.S. companies regarding market conditions for 2024.

Increasing Investment Willingness

Approximately 20% of the foreign firms surveyed indicated plans to increase their investments in China, marking a 2.07% rise from the previous month. Notably, European companies displayed heightened interest, with a 2.5% increase. The eastern region of China emerged as a preferred investment area, with 59.52% of firms looking to expand production lines or enhance digital transformations.

Commitment to Support Foreign Businesses

CCPIT spokesperson Sun Xiao emphasized the importance of improving services for foreign-invested enterprises. With a focus on enhancing market access and closing procedures, the council aims to better serve the needs of these businesses, fostering a conducive environment for foreign investment in the country.

Source : 90% of surveyed foreign firms are satisfied with China’s business environment: CCPIT

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Business

US Enacts New Investment Restrictions on AI and Semiconductor Technologies in China

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Hanshika Ujlayan

The US has implemented regulations restricting investments in key technology sectors in China, citing national security risks, particularly concerning AI and semiconductors, following President Biden’s previous executive order.


US Investment Restrictions on Key Technology Sectors

The United States has implemented new regulations that restrict investments in crucial technology sectors in China, including artificial intelligence and semiconductors, driven by national security concerns. The Treasury Department’s announcement marks a significant change in the US stance on foreign investment in critical technologies.

Effective January 2, US citizens, residents, and companies will be barred from transactions involving advanced technologies. Investors must also alert the Treasury about investments in less advanced technologies that pose potential national security risks, reflecting a broader approach to safeguarding American interests.

These restrictions stem from growing worries about China’s technological capabilities and military applications. The move follows President Biden’s previous executive order to prevent US investments from unintentionally benefiting adversaries. As tensions rise, these regulations are expected to impact the global tech industry significantly.

Source : US implements new investment restrictions on AI and semiconductors in China

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China

Strengthening Economic Relations Between China and Indonesia: Exploring Trade and Investment Prospects

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Indonesia emphasizes green and digital economic development, investing in renewable energy and healthcare. China, its largest trading partner, accounted for 25.24% of Indonesia’s trade in 2022. Although trade declined in 2023, optimism remains for growth in 2024.


The Indonesian government prioritizes the development of emerging sectors such as the green economy and digital economy. Leveraging its natural resources, consumer potential, and labor force, Indonesia has significantly increased its investment and support in renewable energy, electric vehicles, high-value-added downstream mining industries, electronic communications, and healthcare.

Given the complementary strengths of China and Indonesia in resources, production capacity, technological innovation, markets, and industrial chains, there is vast potential for further economic and trade cooperation between the two nations.

As of 2022, China has consistently been Indonesia’s largest trading partner for 10 consecutive years. According to official statistics, China-Indonesia trade accounted for 25.24 percent of Indonesia’s total trade in 2022. China has also been Indonesia’s largest source of imports for 13 consecutive years, with imports from China making up 28.52 percent of Indonesia’s total imports in 2022. Additionally, China has been Indonesia’s largest export destination for seven consecutive years, with exports to China comprising 22.58 percent of Indonesia’s total exports in 2022.

According to Chinese customs statistics, the total trade volume between China and Indonesia reached US$149.09 billion in 2022, a year-on-year increase of 19.8 percent. Of this, China’s exports to Indonesia amounted to US$71.32 billion, up 17.8 percent, while imports from Indonesia totaled US$77.77 billion, up 21.7 percent.

Despite a slight decline in China-Indonesia trade in 2023, with bilateral trade amounting to US$139.42 billion, down 5.9 percent year-on-year, China remains Indonesia’s largest trading partner. This decline is attributed to global commodity price adjustments. The Indonesian Ministry of Trade (Kemendag) is optimistic that exports to China will increase in 2024 due to the government’s efforts to optimize the Two Countries, Twin Parks (TCTP) cooperation project and China’s continued role as a major trade partner, contributing nearly a quarter of Indonesia’s total exports.

Source: General Administration of Customs, China


This article was first published by China Briefing , which is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia from offices across the world, including in in ChinaHong KongVietnamSingapore, and India . Readers may write to info@dezshira.com for more support.

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