Yes, we need a global coronavirus inquiry, but not for petty political point-scoring



Rey Moon/Shutterstock

Paul Komesaroff, Monash University; Ian Kerridge, University of Sydney, and Ross Upshur, University of Toronto

The US government’s call for an international inquiry into the origins of the COVID-19 pandemic has a clear political motive: to shift the blame for its own failure to respond effectively to the epidemic within its own borders.

The finger-pointing by the Trump administration, and by US allies including Australia, has prompted China to refuse to cooperate.

This is unfortunate, because it is in everyone’s interest to work together, not to question China’s handling of the crisis but to discover the factors that cause new infections so we can avert future disasters.




Read more:
Murky origins: why China will never welcome a global inquiry into the source of COVID-19


We need to understand how SARS-CoV-2, the coronavirus that causes COVID-19, came into existence, and to look at how and when we might have been able to impede its progress.

This means examining the origins of the virus and the biological and environmental factors that allowed it to become so dangerous. To achieve this, an international, collaborative scientific investigation free from recriminations and narrow political agendas is needed.

What we know so far

Extensive scientific data have shown that SARS-CoV-2 was not deliberately engineered and there was no conspiracy to create an epidemic. It did not originate in or escape from a laboratory, in Wuhan or anywhere. The first human cases of COVID-19 did not come from the Wuhan wet market but from elsewhere in China, possibly outside Hubei province altogether.

In fact, the disease did not “originate” in a market at all, although an important spreading event linked to the Wuhan market did occur that brought it to the attention of Chinese public health authorities.

SARS-CoV-2 almost certainly descended from an animal virus that underwent a series of mutations that made it dangerous to humans. The path to humans probably involved intermediate animal hosts, although which animals remains uncertain.

So here is the most likely sequence of events: a coronavirus in a bat found its way into one or more other animal hosts, possibly including a pangolin or some kind of cat, somewhere in southern China. At that time, the virus could not infect or cause noticeable disease in humans, or else the animals infected had little contact with humans. Over an unknown period of time (possibly decades) the virus mutated in a way that made it highly dangerous and eventually, by chance, a human became infected, probably in about the second week of November 2019.

The new virus was quickly passed on to other people and found its way to Hubei province. On December 10, an infected individual visited the crowded market in Wuhan and was responsible for infecting 21 other people. Over the following two weeks, enough people became sick to alert doctors and public health officials, leading to an announcement on December 31 warning the world of the dangerous new disease. The market was closed the following day and vigorous efforts were made to identify and isolate contacts.

Three weeks later it was clear these measures could not contain the epidemic, and on January 23 Chinese authorities took the brave and unprecedented step of locking down the entire city. This controlled the spread of the virus in China, but it was too late to stop the spread internationally, because by that time the virus was already present in Taiwan, South Korea, Europe and the United States.

What we don’t know yet

What we now have to find out is what happened in the months or years leading up to November 2019 and whether, in retrospect, anything could have been done to prevent the disaster.

It is crucial we understand the evolution of this virus because, as with all human diseases that emerge from animals, it will have occurred as a result of both random biological events and responses to environmental pressures. The virus had to mutate, the original wild animal had to be exposed to other species, and the virus had to spread within that species and undergo further mutations. The animal had to come into close contact with a human who, at the right moment, has to contract the new infection.




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Despite the low probability of each individual step, in recent decades a long list of viruses has negotiated this entire pathway, including HIV, SARS, MERS, Ebola, Nipah, Lassa, Zika, Hendra, various types of influenza, and now SARS-CoV-2. This suggests new factors are increasing the chances of exposure, adaptation, infection and spread.

It is likely these factors include population growth, agricultural expansion, the loss of natural wild animal habitat, the loss of traditional food sources, and changing relationships between animal species and between animals and humans. Deforestation and climate change further exacerbate this process, as does increased movement of human populations, through domestic and international travel. The international illegal wildlife trade, inappropriate use of drugs and insecticides, and reluctance of governments to work together make matters even worse.

Knowing exactly how these factors affect the genetics and evolution of viruses will help us find ways to thwart them. We could develop a coordinated early warning system to identify and track potentially dangerous pathogens, and monitor interactions between species that could transmit them. We could preserve native habitats and reduce the pressure on wild animals to enter human habitats in search of food. We could strategically cull animals that act as reservoirs for dangerous viruses.

We could precisely target infection control procedures such as health monitoring and quarantine. We could work together to develop diagnostic tests, new drugs and vaccines. We could develop globally coordinated rapid response plans for when new outbreaks arise.




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This process will only work if undertaken with openness, trust, and an acknowledgement that it is in the entire world’s best interest. It will only work if we accept that viruses are not national problems or sovereign responsibilities, but global challenges.

COVID-19 should be a wake-up call that petty recriminations, ideological rivalries and short-sighted political ambitions must be set aside. The countries of the world must encourage China and the United States to raise their sights to the greater challenge and help conduct the investigation we need to avert future disaster.

It is urgent, because the next pandemic may already be incubating somewhere in the world at this very moment.The Conversation

Paul Komesaroff, Professor of Medicine, Monash University; Ian Kerridge, Professor of Bioethics & Medicine, Sydney Health Ethics, Haematologist/BMT Physician, Royal North Shore Hospital and Director, Praxis Australia, University of Sydney, and Ross Upshur, Professor, Dalla Lana School of Public Health, University of Toronto

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Australia has dug itself into a hole in its relationship with China. It’s time to find a way out



Wes Mountain/The Conversation, CC BY-ND

Tony Walker, La Trobe University

In diplomacy, as in life, if you find yourself in a hole it is better to stop digging.

Prime Minister Scott Morrison has excavated a diplomatic cavity for himself and his country as a consequence of an unwise intervention in the debate about China’s responsibility for a coronavirus pandemic.

After a phone call with US President Donald Trump on April 22, during which the two leaders discussed China’s responsibility for the contagion, Morrison took it upon himself to push forward with an Australian coordinating role for an independent international inquiry into the origins of the pandemic.

Morrison wrote to world leaders offering Australia as a coordinator for an investigation of how the contagion came about. This would include examining the role of the China-sympathetic World Health Organisation in managing its spread.

Why Morrison decided to pursue such an intervention immediately after a call to the White House remains a mystery. In the annals of Australian diplomacy, this may well go down as one of the more questionable forays into international diplomacy.

One would have to go back to Robert Menzies’s vainglorious efforts on behalf of Australia’s imperial masters to mediate the Suez Crisis in 1956 to find an apt parallel.

Tracing the source

More than half a century later, another Australian prime minister has fumbled his way into a contentious international dispute. The issue is to what extent China should be held responsible for its mismanagement of the early stages of the pandemic.

This is an open question, which an independent international panel should investigate. China should not be let off the hook.

But the question remains: what possessed Morrison to project Australia into a lead role in holding China to account? Why did he find it necessary to leave an impression that Canberra was doing Washington’s bidding in doing so?

When Menzies made his inept foray into the Suez crisis, Australia had virtually nothing to lose commercially by intervening beyond concerns about a canal lifeline between the Red Sea and the Mediterranean.

But Canberra has much at stake in this latest diplomatic imbroglio. Unwisely, it has enabled Beijing go after an American ally vulnerable to economic blackmail due to Australia’s dependence on China trade.

All this calls into question the quality of Morrison’s China advice. In Canberra, it is an open secret that the moderating influences of the Department of Foreign and Trade have been sidelined.

Ragged China policymaking has enabled a ragtag group of anti-China government backbenchers, led by Liberal Andrew Hastie, a former SAS commander, to run riot. It was Hastie who, implicitly, likened China to Nazi Germany.

Lack of authority in the China-policy space is attributable partly to an unsteady approach by Morrison, and partly to a void in which the authority of Foreign Minister Marise Payne is barely visible.

No reasonable observer pretends that dealing with a surging and ruthless power in our region is anything but complex. This complexity requires a level of subtlety and firmness that has been absent from Australian policy-making towards China since the Malcolm Turnbull era.

In his legitimate championing of foreign interference legislation, Turnbull found himself in thrall to a hyperactive national security establishment and its hawkish anti-China posture.

As a consequence, he overreached in his declaration on three separate occasions Australia would “stand up” against foreign interference. This was a barely disguised – and highly provocative – reference to China.

No Australian prime minister has visited China since 2016.

In one of the more significant interventions in a vexed China debate, the influence of a security establishment was called out at the weekend by Dennis Richardson, a former director of the Australian Security Intelligence Organisation and head of both the Defence Department and DFAT, as well as a former ambassador to Washington.

Giving voice to widespread concerns about the pervasive influence of such an establishment inside and outside the bureaucracy, Richardson said:

If you’re going to shut the gate in respect of China, well, that’s fine provided we are prepared to accept that puts at risk more than $100 billion of exports that will impact on living standards of Australians. This is the problem when you try to wrap the totality of government under the umbrella of national security.

Trade as political weapon

Australia depends on China for one-third of its merchandise and services exports.

In the wake of Morrison’s diplomatic intervention, it did not take long for Beijing to exact crude penalties on an Australian government that had overreached.

China’s anti-dumping action against barley exporters has put in jeopardy trade worth about A$600 million a year. Its resort to technicalities to exclude meat shipments from four abattoirs has unnerved an entire industry.




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China might well refuse to take our barley, and there would be little we could do


Agricultural exporters are bracing themselves for further action. Australia’s lucrative dairy trade is vulnerable. Wine shipments are at risk. Wool sales might also be jeopardised.

China will have a long list of potential targets.

This includes thermal coal shipments. These were subjected last year to delays in coal carriers offloading cargo in the northern port of Dalian. Thermal coal from Indonesia and Russia was given preference.

At the time, it was assumed China was inflicting pain on the thermal coal industry in retaliation for Australia’s lobbying of its Five Eyes partners to exclude the Chinese telecommunications giant, Huawei, from a build-out of their 5G networks.

It is hard to exaggerate Beijing’s irritation over the Huawei intervention.

So what should the Morrison government do here that would be constructive diplomacy?

First, government officials need to get beyond a mindset that simplistically references Chinese bullying, as if this is a sufficient response to threats to Australia’s economic well-being.

The pressing question remains: how does Australia deal with a regional behemoth that seeks to bend a global rules-based order in its favour?

This is the reality we have to live with.

Morrison could do worse in the present situation than reset a clear policy towards China that defines Australia’s own interests in its own region.

He should restate words he used in an Asialink speech early in his tenure. He said:

[…] the government is fully aware of the complexity that is involved in our region and the challenges we face in the future […] And we are careful as a government to ensure that we don’t seek to make them any more complex than they need to be.

Morrison should have listened to his own advice.

He might consider writing personally to China’s President Xi Jinping along these lines. He needs to ignore those in his immediate circle and on a cacophonous backbench who would argue relations with China are a zero-sum game.

They are not. There needs to be give and take. This is not yielding to Chinese bullying. This is common sense.

Common sense should put a dampener on a belief that, at the wave of a wand, “supply chains” linking Australia and China can be remodelled. This sort of naïve view loses sight of the fact that, for as long as it is possible to foresee, bulk commodities will form the staple of the trading relationship.

Given this, Morrison would be advised to cease acting like a global traffic cop in efforts to hold China to account for the coronavirus pandemic.

What Australia should be doing – and should have done in the first place – is support international efforts to bring about an inquiry. It will have early opportunity next week when the World Health Assembly considers a European Commission resolution along those lines.

Morrison needs to pay less attention to a China-obsessed national security establishment and give more credence to advisers who actually know something about China. Most importantly, he should stop digging.The Conversation

Tony Walker, Adjunct Professor, School of Communications, La Trobe University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Pandemic dents Australians’ views of both China and the United States


Michelle Grattan, University of Canberra

Both China and the United States have suffered reputational damage with the Australian public as a result of their handling of the coronavirus crisis, according to a Lowy COVIDpoll.

Most Australians (68%) say they feel “less favourable towards China’s system of government” when thinking about China’s handling of the outbreak.

Nearly seven in ten (69%) think China has dealt with it badly.

An overwhelming 90% believe the US has performed badly. The US is rated at the bottom of a list of six countries, also including Singapore, the United Kingdom and Italy, in how well COVID has been handled.

In contrast, 93% think Australia has done well so far.

Building on the anti-Trump feeling that showed up in earlier Lowy polling, 73% said they would prefer Democratic candidate Joe Biden to become president at the November election, compared 23% who want Donald Trump to be re-elected.

The poll of 3036 was done April 14-27.

It comes as trade relations with China have become increasingly tense this week with disputes over Australian exports of barley and beef. China has suspended imports from four abattoirs in Australia and threatened hefty tariffs on Australian barley.

Although the barley row has been going on some time, as have some of the beef complaints, the actions on both fronts are seen as retaliation for Australia pushing for a inquiry into the origin and handling of COVID-19.

As of late Wednesday trade minister Simon Birmingham had not been able to get in contact with his Chinese counterpart.

The trade difficulties are also generating domestic pressure.

On Wednesday Queensland Premier Annastacia Palaszczuk said she was writing to Birmingham asking him to get a resolution to the beef dispute as soon as possible. She said thousands of Queensland jobs were involved.

Australia China Business Council CEO Helen Sawczak said: “To go out like a shag on a rock little Australia demanding an inquiry and insinuating blame was probably not a great foreign policy move.”

On the other hand some Coalition backbenchers have been taking strong public positions against China, complicating the government’s attempt to manage the disputes between the two countries.

In the Lowy poll, 37% said that when the world recovers from the crisis, China will be “more powerful” than it was before the crisis; 27% said it would be less powerful; 36% predicted no change. In 2009 in the wake of the global financial crisis 72% said China would be more powerful.

Just over half (53%) say the US will be less powerful; 41% predict no change; 6% believe American power will grow. In 2009 33% said the US would be less powerful than before.

Lowy’s Natasha Kassam, author of the Lowy report, said: “Despite Beijing’s efforts to shift the focus from its early mismanagement and coverup of the virus, to its apparent success in containment and providing support to struggling countries, Australians appear unconvinced.

“Australians’ views of China during the pandemic track with the previous downturn in sentiment towards China: in 2019, only a third of Australians said they trusted China, and the same number had confidence in China’s leader Xi Jinping to do the right thing in world affairs.

“As much as Australians have expressed disappointment in China’s handling of the outbreak, they are even more concerned by the response of the United States.

“While watching the current tragedy unfold in the United States, the competence and reliability of the United States is looming even larger as a question for Australians,” Kassam said.

In the poll, people gave a big thumbs up to Australian medical authorities and governments. More than nine in ten (92%) said they were confident the chief medical officers were doing a good job responding to the outbreak. The rating for states and territories was 86%, and 82% for the federal government. Confidence in the performance of the World Health Organisation was a much lower 59%.

Australians are not retreating from globalisation as a result of the crisis. Seven in 10 people say globalisation is “mostly good for Australia”. This is consistent with 2019.

Some 53% want “more global co-operation rather than every country putting their own interests first” in a global crisis.

A majority (59%) say they are just as likely to travel overseas as before, when COVID is contained.

Asked their preferred sources of information during the coronavirus outbreak (and allowed to choose up to three), 59% chose the Prime Minister and government officials, 50% government websites, 50% the ABC, 31% newspapers and news websites, 28% commercial, pay TV news and radio, 20% social media, and 5% word-of-mouth.The Conversation

Michelle Grattan, Professorial Fellow, University of Canberra

This article is republished from The Conversation under a Creative Commons license. Read the original article.

US-China relations were already heated. Then coronavirus threw fuel on the flames



Kevin Lamarque/Reuters

Nick Bisley, La Trobe University

Even before the COVID-19 crisis upended the world, US-China relations had entered a particularly mistrustful and combative period.

While the mutual antagonism predated the Trump administration – Chinese President Xi Jinping had earlier ushered in a more assertive and ambitious approach to the world and the Obama administration recognised the limits to its engagement with China – the 45th US president took things to a new level.

In its 2017 national security strategy, the Trump administration openly stated that great power competition was the defining feature of the age and the contest with China was at the heart of US global strategy.




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President Donald Trump then made good on his campaign bluster to launch a trade war with the PRC and sought to decouple aspects of US economic interdependence with Beijing.

For its part, Beijing has unapologetically pushed its agenda in destabilising ways. This has included militarily fortifying artificial islands in the strategically crucial South China Sea, acting assertively in the East China Sea, curtailing promised freedoms in Hong Kong and setting out to literally kill off Uyghur culture in Xinjiang.

Trump and Xi have rarely seen eye-to-eye since the US president came into office.
OMER MESSINGER/EPA

Trump turns up the heat in an election year

The current global pandemic has created a human catastrophe not seen outside wartime. But rather than being a reason for China and the US to come together, COVID-19 has been an accelerant in their hostilities.

American resentment toward China has increased dramatically, stoked by the explicit efforts by the Trump administration to pin the blame for all aspects of the pandemic on the PRC.

Secretary of State Mike Pompeo has repeatedly sought to formalise criticism of China, such as in communiques at the G7. Just last week, he also declared the US had “significant evidence” the pandemic was not just a disaster unleashed by Chinese mismanagement, but had been manufactured in a laboratory in Wuhan.




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Before coronavirus, China was falsely blamed for spreading smallpox. Racism played a role then, too


Those in the administration and the private sector who had argued for a delinking of the US economy from China are now using the crisis to push harder for that goal.

Trump has also flagged a further escalation of the trade dispute between the countries, which had been paused after an interim agreement in January.

It is now clear he will make the politicisation of China a central plank in his re-election campaign.

Beijing forcefully denies US ‘lies’

Elites in Beijing perceive this to be in line with Washington’s long-term efforts to contain China’s influence and curtail its growth. And Beijing’s defensiveness in the face of criticism over its handling of the pandemic has led it to adopt a new and more combative diplomatic tone.

Ranging from absurd conspiracy theories that the virus was an American invention to threats against Australia’s call for an independent investigation into the pandemic – including flagging a tariff on barley exports – this “wolf warrior” diplomacy reflects not only clumsy political communication but a highly competitive outlook.

On Saturday, Beijing issued its most forceful defence against what it called “preposterous allegations” by the US – an 11,000-word article denying everything from claims it under-reported case numbers to allegations the virus spread from eating bats.

The relationship between the world’s two biggest economies has deteriorated significantly, but not yet irretrievably so.

The friction is principally symbolic and, in theory at least, adept diplomacy and some walking back of the more overheated rhetoric could go a long way. The problem is the positioning in both Washington and Beijing is largely for domestic audiences. And both Xi and Trump see little domestic capital to gain if they moderate their positions.




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Murky origins: why China will never welcome a global inquiry into the source of COVID-19


In Beijing’s terms, China was the first to suffer from the virus. But for most of the rest of the world, the virus spread due to the PRC’s inability to manage the initial outbreak due to denial and cover-ups.

The world, rightly, wants not only an explanation but an understanding of the origins of the virus and how it spread to prevent future pandemics. Beijing, however, wants to present itself as a successful model in combating the virus and a source of much-needed medical equipment and money to support other countries’ efforts.

Medical aid from China arrives in Myanmar last month.
NYEIN CHAN NAING/EPA

So far, China seems unlikely to accept any international inquiry. A recently leaked report commissioned by its Ministry of State Security, however, indicates Beijing is aware of the levels of international hostility directed towards it over its handling of the virus. The report said global anti-China sentiment is at its highest since the 1989 Tiananmen Square crackdown.

Consequently, it may yet shift its approach, which would certainly help lower the international temperature.

Who comes out of the pandemic on top?

All of this indicates the current crisis will not transform relations between the US and China in a positive way, but rather accelerate the competition between the two.

How this rivalry plays out and its implications for the world will depend on a couple key factors.

First, there’s the nature of the economic recovery. Who will recover faster and how bad will the damage be?

It seems most likely the US will have constrained capacity to project power globally and head off Chinese ambition after the pandemic subsides.

The US will likely emerge from the pandemic a slightly diminished power.
Richard B. Levine/SIPA USA

But China will also be hobbled to some degree and unlikely to be able to simply replace the US in Asia. Its ambitious infrastructure and political capital-building exercise, the Belt and Road Initiative, is likely to be curtailed to some degree.

A second factor will be the extent to which each side is able to use the pandemic and its aftermath to build partnerships with countries around the world. This is particularly important as many nations – both rich and poor – will be facing truly dire economic circumstances.

Trump has famously questioned the benefits of alliances and strategic partnerships and, if re-elected, is likely to continue to damage one of the US’s greatest geopolitical assets.

China, on the other hand, will attempt to use its significant wealth and developmental capacity to strengthen its network of global partners. It remains to be seen, though, whether these efforts will outweigh a loss of global trust in China due to the pandemic.

The global financial crisis of 2007-08 dealt a blow to the finances, confidence and credibility of western powers.

COVID-19 is likely to have at least as big an effect. Not only will the global recovery occur in the context of a turbocharged geopolitical rivalry between two superpowers, it will be one in which the US is likely to be weaker and China stronger than before.The Conversation

Nick Bisley, Dean of Humanities and Social Sciences and Professor of International Relations at La Trobe University, La Trobe University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

China might well refuse to take our barley, and there would be little we could do



Shutterstock

Weihuan Zhou, UNSW

Australia’s surprising call for an investigation into the origin of the coronavirus in China has provoked escalating threats of retaliation by China.

China started with a warning that Australia’s position might spark a Chinese consumer boycott.

It’s now threatening tariffs on Australian barley that would include a “dumping margin” of up to 73.6% and a “subsidy margin” of up to 6.9%.

The subsidy claims are thought to refer to drought support measures and Australia’s diesel fuel tax rebate.




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Together with the dumping tariff (a penalty for allegedly selling barley too cheaply) they would amount to a tariff of 80.5%, effectively putting an end to Australian barley sales to China.

Australia’s exporters and the government have been given ten days to respond.

There’s more to it than barley

A series of decisions and reactions to events that were perceived as anti-China has pushed relations between Australia and China to the verge of a historic low.

Each time, China has urged Australia to reconsider its position and on some occasions has threatened to retaliate.

Recent examples include Australia’s exclusion of Huawei from its 5G network for fear of the influence of the Chinese government on its activities, and the COVID-19 travel ban which singled out China when introduced on February 1 even though by then the virus had spread to other countries.

China targeted barley for good reasons.

Why barley?

China is Australia’s largest market for barley exports.

Between 2015 and 2018, China imported, on average, 4.6 million tonnes or A$1.3 billion of Australian barley accounting for over 70% of Australia’s barley exports.

A tariff increase would have significant impacts on Australia’s barley producers who are scattered over several Australian states, putting considerable political pressure on the Australian government.

China meanwhile has other suppliers from which to choose. It can restrict imports of Australian barley while continuing to buy barley from elsewhere.

And contrary to the claims by Trade Minister Simon Birmingham, the Chinese tariffs are not legally unjustifiable.

The tariffs would be the result of an ongoing anti-dumping investigation into barley exported from Australia that China’s Ministry of Commerce initiated on November 19, 2018.




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It’s time to drop Australia’s protectionist anti-dumping rules


Anti-dumping measures, which seek to prevent lower-priced imports from causing injury to domestic industries, are permitted under the rules of the World Trade Organisation and the China-Australia Free Trade Agreement.

Australia itself has been one of the most frequent users of anti-dumping measures, particularly against China.

The 2015 China-Australia Free Trade Agreement cut Chinese tariffs on Australian barley exports to zero. But it included an exemption: anti-dumping provisions that could increase the tariffs to any rate.

At the start of the 2018 investigation, China’s barley industry requested an anti-dumping tariff of 56.14%. The proposed rate was increased to 73.6% after investigations by Chinese authorities.

That is the investigation that authorities will finalise by May 19, the one started eighteen months ago, on November 19, 2018.




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It began long before COVID-19, motivated among other things by Australia’s enthusiastic use of anti-dumping measures on products such as Chinese steel.

But its timing has made it a useful way to push Australia to change its anti-China position on an inquiry and on other matters in the future.

Since China’s investigation began, Chinese customers have become “very cautious about buying Australian barley” in the assessment of the Canadian barley industry which has benefited by selling Chinese customers barley they once would have sourced from Australia.

The actual imposition of the tariff will hurt more.




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Australia has to prepare for life after the World Trade Organisation


The only legal avenue for Australia to challenge it would be the World Trade Organisation’s dispute settlement mechanism which had been brought to a near halt by the United States refusing to appoint appellant judges and would in any case take years to process without a guaranteed win.

Even if Australia is successful, China may simply begin a reinvestigation which may maintain the original decision.

What’s the best way out?

Australia needs to take actions to ease the tensions and strengthen economic relationship with China.

Abundant evidence has shown that China will remain an irreplaceable Australian customer meaning it would be neither possible nor wise for Australia to decouple from China.

Diplomatic actions, such as the appointment of a special Australian China envoy, will be desirable but not sufficient. Australia has to ensure its future policy decisions are not biased against China.




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To help, Australia could consider a gradual reduction of travel restrictions on China based on China’s success in fighting the virus and renewed more realistic assessment of the potential health risks posed by Chinese travellers.

Australia needs to be cautious in foreign investment decisions which have already been regarded as discriminatory against China before the pandemic.

The pandemic brought forth temporary changes of Australia’s foreign investment rules, making all proposals the subject of Foreign Investment Review Board scrutiny regardless of size.




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While the changes applied to foreign investors from all countries, Australia’s decision to reject two from China has raised concerns about whether the decisions have been compromised by anti-China politics.

Instead of direct rejection, Australia might have been better off offering to approve them under conditions sufficient to address national interest concerns.

Australia should reassess its position on the 5G network to ensure it focuses on risks associated with 5G equipment rather than the nationality of 5G suppliers, as have Britain and the European Union.

These actions would signal a strong political will to repair the relationship that would build the foundation for the two economies to broaden and deepen economic engagement for mutual benefits.The Conversation

Weihuan Zhou, Senior Lecturer and member of Herbert Smith Freehills CIBEL Centre, Faculty of Law, UNSW Sydney, UNSW

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Beyond travel, a trans-Tasman bubble is an opportunity for Australia and NZ to reduce dependence on China



http://www.shutterstock.com

Hongzhi Gao, Te Herenga Waka — Victoria University of Wellington and Monica Ren, Macquarie University

When it comes to our economic over-reliance on China, New Zealand consumers need look no further than their most popular big box chain, The Warehouse. The familiar “big red shed” sourced about 60% of its home brand stock from China in 2017 – and a further NZ$62 million in products directly through offices in China, India and Bangladesh in 2019.

In Australia, many major chain stores as well as online retail giant kogan.com are in a similar position. Reliant on China for much of what they sell, including exclusive home-brand items, they are part of what has been described as the world’s most China-reliant economy.

The COVID-19 crisis has thrown Australian and New Zealand businesses’ dependence on China into stark relief. With countries reportedly competing with and undercutting each other to secure desperately needed medical supplies from China, many are now waking up to their economic exposure to a single manufacturing giant.

Understandably, discussions about creating a “trans-Tasman bubble” between Australia and New Zealand have focused on kick-starting economic activity in the short term, particularly through tourism. But both countries also need to take a longer-term view of boosting economic activity – including through increased manufacturing and trade integration.




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The statistics support this. In 2018, 20% of global trade in the manufacturing of “intermediate” products (which need further processing before sale) came from China. Chinese manufacturing (including goods made from components made in China) also accounted for:

  • 35% of household goods
  • 46% of hi-tech goods
  • 54% of textiles and apparel
  • 38% of machinery, rubber and plastic
  • 20% of pharmaceuticals and medical goods
  • 42% of chemical products.

Australia and New Zealand are no exception, with China the number one trading partner of both. Australia earned 32.6% of its export income from China in 2019, mostly from natural resource products such as iron ores, coal and natural gas, as well as education and tourism.

Inside a Bunnings store in Australia: many of the shelves would be empty without goods sourced from China.
http://www.shutterstock.com

From New Zealand, 23% of exports (worth NZ$20 billion) went to China in 2019, and much of the country’s manufacturing has moved to China over the past 20 years. The China factor in New Zealand supply chains is also crucial, with a fifth of exports containing Chinese components.

Supply shortages from China

The world is now paying a price for this dependence on China. Since the COVID-19 outbreak in early 2020 there has been volatility in the supply of products ranging from cars and Apple phones to food ingredients and hand sanitiser packaging.

More worryingly, availability of popular over-the-counter painkiller paracetamol was restricted due to Chinese factory closures. This is part of a bigger picture that shows Australia now importing over 90% of medicines and New Zealand importing close to NZ$1.59 billion in pharmaceutical products in 2019. Overall, both countries are extremely vulnerable to major supply chain disruptions of medical products.

For all these reasons, a cooperative trans-Tasman manufacturing strategy should be on the table right now and in any future bilateral trade policy conversations.

The big red shed: New Zealand’s Warehouse chain sources 60% of its products from China.
http://www.shutterstock.com



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Opportunities for Australia and NZ

Rather than each country focusing on product specialisation or setting industrial priorities in isolation, the two economies need to discuss how best to pool resources, add value and enhance the competitive advantage of strategic industries in the region as a whole.

Currently, trans-Tasman trade primarily involves natural resources and foodstuffs flowing from New Zealand to Australia, with motor vehicles, machinery and mechanical equipment flowing the other way. Manufacturing is skewed towards Australia, but closer regional integration would mean increased flows of capital, components and finished products between the countries. We have seen this already in the primary and service sectors but not much in the manufacturing sector, especially from New Zealand to Australia.

Medical technologies and telecommunications equipment manufacturing (both critical during the pandemic) stand out as potential new areas of economic integration. In that sense, it was heartening to see major medical tech companies such as Res-Med Australia and Fisher & Paykel Healthcare in New Zealand rapidly scale up their production capacities to build respiratory devices, ventilators, and other personal protective equipment products.




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These brands enjoy a global technology edge, smart niche positioning and reputations for innovation. We need more of these inside a trans-Tasman trade and manufacturing bubble.

China still vital but balance is crucial

Key to successful regional integration will be the pooling of research and development (R&D) resources, mutual direct investment, subsidising R&D and manufacturing in emerging markets with profits from another (such as China), and value-adding specialisation in the supply chain. For example, Tait Communication in New Zealand recently invested in a new facility based in one of Australia’s largest science, technology and research centres.

Together, we can make a bigger pie.

None of this means cutting ties with China, which will remain the main importer of primary produce and food products from Australasia for the foreseeable future. And Chinese exports will still be vital. Fisher & Paykel Healthcare sells its products in about 120 countries, for example, but some of its key raw materials suppliers are Chinese.

Getting this dynamic balancing right will be key to Australia and New Zealand prospering in the inevitably uncertain – even divided – post-pandemic global business environment. And you never know, maybe one day we’ll see a “made in Australia and New Zealand” label in the aisles of The Warehouse and Bunnings.The Conversation

Hongzhi Gao, Associate professor, Te Herenga Waka — Victoria University of Wellington and Monica Ren, Lecturer/ Assistant Professor, Macquarie University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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Coronavirus Update: International


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