An Australian cross-party parliamentary committee has recommended the country diversify its exports away from its dependence on China, as well as reviewing Chinese ownership of critical infrastructure assets.
Trade and political relations between Australia and China have deteriorated over the past 12 months, which were exacerbated over a row about the origins of the Covid-19 pandemic. This resulted in China placing restrictions and tariffs on a range of commodities from Australia, including coal, barley and beef. China buys around a third of Australia's exports.
"As trade and political tensions... escalate, one thing is clear, Australia needs to pivot," said the report from the Australia's Joint Standing Committee on Trade and Investment Growth.
Iron ore is Australia's largest export by value and volume, with China buying around 80pc of Australian shipments. But the committee concluded it would be challenging to diversify Australian iron ore exports from China to other countries.
Around 60pc of Australia's merchandise goods exports are energy and mineral exports. Australia is the world's largest exporter of iron ore and coking coal and the second-largest exporter of thermal coal and LNG.
Rising trade tensions and the Covid-19 pandemic have emphasised weaknesses in many countries' approach to trade. "In Australia, the combination of these disruptions has led many to question whether we are too reliant on China as our major export market, and whether this has unnecessarily exposed Australia to security and economic risks," the report said.
The committee also made recommendations aimed at protecting Australia's national interests and national security, particularly in sensitive and critical sectors. "Given the ongoing tensions with China, it is an unacceptable national security risk to have Chinese state-owned and state-linked enterprises involved in our universities and our strategic infrastructure," the report said, highlighting the port of Darwin in the Northern Territory.
But reducing the China dependence in Australia's export mix is a highly challenging proposition, the report said. "Outside of India, there is no single national market of equivalent potential size that could demand Australian primary commodities on a comparable scale."
