OECD warns against over reliance on China

AUSTRALIA has been issued a grave warning about the true economic impacts of China’s volatile behaviour by one of the most powerful international organisations in the world.

The Organisation for Economic Co-operation and Development released a report on Wednesday urging the Australian government to pivot away from its largest trading partner and find new countries to ramp up trade with.

“Over the past two decades, the share of Australia’s merchandise exports destined for China has increased from 10 per cent to around 40 per cent and now surpasses Australia’s total merchandise exports to all OECD countries combined,” the report says.

“The increased concentration of export flows makes Australia more vulnerable to a future shock in the Chinese economy or import restrictions being imposed on additional commodities, such as iron ore.”

The OECD stressed that while a strengthened trade relationship with China had brought benefits for Australia, relying on this relationship into the future is dangerous.

China has already weaponised trade to try to coerce Australia to alter its strategic behaviour, imposing high tariffs on key Aussie exports such as wine, beef and barley. The OECD warned if this spread to other important industries, the impacts could be devastating.

“The further imposition of trade restrictions by China, in areas such as iron ore and education, would substantially dent the pace of economic recovery,” the report says. “(Australia should) explore the potential for trade diversion to other export markets.”