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Economist says decoupling economic relationship with China not in Australia's interest

(Xinhua)    09:12, May 08, 2020

SYDNEY, May 7 (Xinhua) -- With debate about Australia's over-dependency on China intensifying recently, a report from an Australian think tank on Thursday said decoupling its economic relationship with China is not in Australia's interest.

"There is an increasing amount of commentary in Australia, particularly after COVID-19, advocating for a decoupling of the Australian and Chinese economies. Those calls are not sensible in terms of promoting Australia's national interest," said one of the authors, James Laurenceson, director of the Australia-China Relations Institute at the University of Technology Sydney.

"So I thought it was important that we wrote a report laying out the facts and the evidence to argue that Australia's economic relationship with China is in the national interest," he said.

According to the report, Australia's trade with China in 2018-2019 reached 235 billion Australian dollars (151.5 billion U.S. dollars), compared with 88.5 billion Australian dollars (57 billion dollars) with Japan, putting it in second place.

According to the Australian Bureau of Statistics, Australia's trade surplus ballooned to a record 6.8 billion U.S. dollars in seasonally adjusted terms in March, largely on the back of strong Chinese demand for iron ore.

"The reality is that China wants what Australia is producing, and China also has the purchasing power to pay for it. That combination doesn't exist for other countries," said Laurenceson.

"I am sure that as we go forward, there will be more and more calls, particularly from those with a national security background to argue in favor of forcing a decoupling of the two economies. If we're going to have that conversation, we need to have a sensible and informed conversation that was based on facts and evidence, not based on fears and sound bites," he said.

Laurenceson believed the economic complementarity between the two countries is an important driver of their trade relationship, which will still play a role after the pandemic.

"I'm optimistic about the strength of the Australia-China economic relationship. The economic complementarities between the two countries are strong and quite robust," Laurenceson said.

"I don't see China becoming less important to Australia in the coming years. It's true that COVID-19 has hurt China's economic growth, but for the United States or for the European Union, the outcomes are likely to be even worse. So, if Australia is going to be exposed to a major global economy, I'd still prefer it to be China," he said.

He said the two sides should avoid letting politics affect the trade relationship and continue to find new areas for cooperation instead, such as advocating a rule-based international trading system.

"Trade is an area in Australia's interest and in China's interest so this is precisely the area that we should be working on together and trying to strengthen, not turning it into a weakness," he said.

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