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Trade Sanctions Fail to Dampen China’s Dominance as Australia’s Largest Agricultural Export Market

For the second consecutive year, the value of Australian agricultural exports has reached a historic high of $80 billion, with winter crops playing a pivotal role in driving an impressive 20 percent growth in the market.

In the 2022-23 financial year, broadacre crop exports, valued at $31 billion, accounted for over one-third of Australia’s total exports.

The cotton industry also witnessed a remarkable surge, doubling its export earnings to $4.9 billion, a notable increase of $2.7 billion from the previous year.

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Despite ongoing trade sanctions affecting specific Australian commodities, China continues to maintain its position as the primary export destination for Australian agricultural products.

It accounts for roughly 20 percent of Australia’s agricultural exports and remains the top growth market in terms of dollar value for the second consecutive year.

Chinese exports, primarily driven by the wheat market, increased by nearly $3 billion in 2022-23.

China retained its status as the leading market for Australian crop exports for the second consecutive year, with an impressive 62.5 percent surge in the value of crop exports, totalling $5.4 billion. Additionally, China remains the most lucrative market for Australian cattle, contributing 22 percent to the total export value.

In 2020, Beijing imposed trade sanctions on a wide range of Australian products, including barley, beef, cotton, lamb, lobsters, timber, and wine.

These sanctions were in response to former Australian Prime Minister Scott Morrison endorsing an inquiry into the origins of COVID-19, which angered Beijing and led to retaliatory sanctions on Australian exports.

Barley tariffs were lifted in 2023 following widespread drought in China which saw significant crop failure. Despite several ongoing sanctions, Australia still plays a significant role in feeding China.

Could Exports to China Face Future Threats?

Chinese leader Xi Jinping has recently emphasised China’s goal of achieving self-sufficiency in food production, potentially impacting Australian agricultural exports to the region.

On Sept. 7, during a visit to the flood-ravaged northeast part of the country, a major grain-producing region, Mr. Xi announced to party officials that the country must prioritise food self-sufficiency.

Presently, China produces approximately 76 percent of its own food, down from around 100 percent in 2000.

Xi stressed, “Ensuring the country’s food security should be placed as the top priority.”

He urged officials to “increase production capacity to ensure that grain production and supply are sufficient to meet regular demand and can serve as a reliable source during extreme circumstances.”

Prior to the imposition of recent sanctions, China constituted approximately 30 percent of Australia’s export market. Japan and the United States continued to hold their positions as the second and third most significant markets for Australian agriculture.

China is also the world’s largest importer of rice with one million tons coming from India in 2021.

Preparation for Extreme Circumstances

Mr. Xi’s address on May 30 to China’s National Security Commission included the declaration, “We must be prepared for worst-case and extreme scenarios and be ready to withstand the major test of high winds, choppy waters, and even dangerous storms.”

Jin Canrong, a distinguished foreign policy expert in Beijing, suggests that the Chinese leader’s use of the term “extreme” serves as a warning about “the danger of war.”

He fears that Mr. Xi may use force to unify Taiwan with China as soon as 2027, hence the focus on food security. In the event of hostilities, China would need to rely on its own food production as import sanctions could disrupt its food supply.

Mr. Xi sees agriculture as the foundation of national security, saying in a March 2023 article in Qiushi, the communist party’s main theoretical journal, that “Once something’s wrong with agriculture, our bowls will be held in someone else’s hands and we’ll have to depend on others for food. How can we achieve modernisation in that case?”

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