Figures from the Australian Bureau of Statistics show that China is Australia’s largest trading partner by far, with two-way trade amounting to $194.6 billion (AUD), or 24.4 percent of the country’s total bilateral trade, in the fiscal year 2017-2018 (the latest stats available).
To put this in perspective, Australia’s second-largest trading partner is Japan, which accounts for 9.7 percent of the total, followed by the United States, at 8.8 percent.
Australian exports to China totalled $123.3 billion (AUD) in the same fiscal year, representing 30.6 percent of Canberra’s total exports, while Australian imports from China were worth $71.3 billion (AUD), or 18 percent of the total.
These figures indicate the extent of Australia’s exposure to the severe supply chain disruption being experienced in China, following the outbreak of the Coronavirus epidemic in December.
Let’s take a closer look at how Australia’s exports to, and imports from, China are being impacted by the supply chain disruptions:
Australia’s exports to China include iron ore, coal, and natural gas, agricultural products led by beef, barley, and wool, and fish, including shrimps and lobsters.
China’s decision to quarantine the city of Wuhan, where the virus was first detected, and to close factories, enforce massive lockdowns, and institute surveillance measures countrywide, has caused disruptions in Australia’s outbound supply chains.
The effects include:
While the full impact of the virus on Australian exports to China is still to be assessed, the following reports give some idea of the pervasiveness of the supply chain problems:
Australian imports from China mainly comprise manufactured goods, including telecommunications equipment, IT products, furniture, home ware, clothing, toys, sports equipment, and televisions.
As with exports, the Chinese lockdowns and quarantines have disrupted Australia’s inbound supply chains and played havoc with imports.
The rush by Australians to stock up with toilet paper, hand sanitisers, rice, disinfectants, and eggs among other things not directly connected with disruption to Chinese supply chains, is mainly linked to nervous consumer stockpiling.
According to psychology experts asked to comment on this phenomenon, the tendency toward panic buying is due to the nature of the Coronavirus event, which unlike more acute natural disasters, presents a largely unknowable prognosis relating to impact-timescales and intensity.
But economists and analysts quoted by Channel 9 TV say that the longer the Chinese shutdown lasts, the more Australians will start experiencing genuine shortages of the following items:
Australia was not always as reliant on China for its imports as it is today. Back in 2000, the picture looked like this, according to World Bank figures:
Ten years later, however, China topped the list.
And in 2019, China is firmly entrenched in the top spot
A look at what is being imported and exported will give us a better idea of the range of products that could be affected should the world economy go into meltdown due to the virus, as some doomsday economists are predicting.
The following tables show Australia’s main imports and exports in the fiscal year 2017-18 (the latest statistics available). Source Australian Bureau of Statistics.
Exports:
Imports:
Aware of the dangers of being over-reliant on a single trading partner, Australia had, even before the outbreak of the virus, started trying to diversify its markets by launching negotiations for free trade agreements with countries such as Indonesia, India, Japan, South Korea, and the United Kingdom.
These agreements, which Australia in all likelihood will now try to tie up as speedily as possible, will open new supply chain sourcing options for the country, especially in other parts of Asia—fulfilling a longer term goal of the country’s government.
However, while that may be a solution for the longer-term future, Australia has little choice for now but to ride out the rapidly-spreading COVID-19 epidemic the best way it can.
Professionals in the supply chain management sector can expect the months to come to be a wild ride indeed, during which they may need to contend with:
If there is a silver lining for Australian supply chain and logistics managers to the dark cloud of COVID-19, it’s the fact that challenge, change, and disruption are nothing new to those of our ilk.
Now is the time for cooperation and collaboration, innovative thinking, and for drawing on collective experiences from the multitude of industries that our profession serves. Coronavirus is a big disruption, and will drive a lot of change, which ultimately means the learning experience will be of great future value after the crisis abates.
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