Relations between Australia and China have reached their lowest point in over half a century, and that point is on a definite downwards trajectory. While iron ore exports are expected to stay safe, multiple agricultural industries are being hit with new tariffs and even the coal industry is feeling the brunt of an unhappy China. It all started with an 80% tariff on Australian barley back in May, followed by import restrictions on abattoirs and wheat exporters. Australian cotton, timber, and rock lobster were then caught up in trade disruptions, followed by wine and beef. 

The truth is, China has significant leverage over Australia, as our biggest customer across multiple primary sectors.

Multiple Australian industries have expanded their trade relationships with China since the China-Australia Free Trade Agreement was signed back in December 2015. China was, by far, Australia's largest individual two-way goods and services trading partner in 2018-19, accounting for 26.4% or $235 billion of total trade. According to the Department of Foreign Affairs and Trade (DFAT), China was both Australia's largest export destination and import source at $153.2 billion and $81.8 billion respectively.

The future economic relationship between Canberra and Beijing is uncertain but not looking good. Australian honey exports are now under pressure, and previously safe resource sectors like coal are starting to feel the pinch. Potential tariffs on dairy products would represent the next escalation in tensions, with Chinese consumers demanding Australian dairy products for almost a decade. There is a very real risk that both honey and dairy markets will shift to New Zealand, as China looks to diversify at a much faster rate than Australia seems capable. 

The fruit industry could also come under pressure from China, which would be devastating in the current environment due to a lack of seasonal workers. Apple, pear, and stone fruit growers are just some of the industries that send a huge amount of produce to China, with more than 30% of their industry exports destined for Chinese markets. According to IBIS World senior industry analyst Liam Harrison, "Losing China as an export market could be devastating to an already weakened industry... Fruit farmers across Australia have already suffered major setbacks, including sweltering heats early in the year, severe bushfires and now a shortage of fruit-pickers due to COVID-19 travel restrictions."