Australia’s escalating tensions with Beijing have shown up its reliance on Chinese trade and propelled a push to increase links with Asia’s other giant economy, India.
New enrollments of international students from India expanded 32 percent last year from a year earlier and it is the fastest-growing major market for Australian services.
India has overtaken China as the largest source of net migration to Australia, and its diaspora is the third-largest Down Under, just behind China and the UK.
India’s swelling population — set to overtake China’s in 2027 — suggests ongoing opportunities for Australia to diversify a trade portfolio that currently makes it the developed world’s most China-dependent economy.
The need to switch things up has accelerated as ties sank to their lowest ebb in 30 years after Canberra’s calls for an international inquiry into COVID-19’s origins was taken by Beijing as a political attack, with China imposing barriers on barley, beef and wine from Australia.
This has Canberra looking to its democratic, cricket-loving ally to fill the void.
Australian Prime Minister Scott Morrison held a virtual summit with his Indian Prime Minister Narendra Modi in June, and the two signed a defense agreement and upgraded ties to a comprehensive strategic partnership.
The trade ministers of Australia, Japan and India have also agreed to work toward achieving supply chain resilience in the Indo-Pacific.
“We can sell India education, healthcare, and there’s potential in science and technology,” said Ian Hall, a professor of international relations at Griffith University in Queensland. “It’s much more the consumer market of India’s growing middle class than goods.”
Yet trade with India has its own challenges. Its government is wedded to economic nationalism, as showcased last year when it pulled out of the Regional Comprehensive Economic Partnership designed to free up trade.
Delhi wants to send lots of people to Australia on work visas and does not want to reduce tariffs, former Australian minister for trade and competitiveness Craig Emerson said.
“India is highly concerned about its trade deficit,” said Lai-Ha Chan (陳麗霞), a political science lecturer at the University of Technology in Sydney, adding that after signing free-trade agreements with South Korea and Japan, India’s trade deficit with those nations ballooned.
Australia’s most valuable export — iron ore — has not been caught in China’s crosshairs yet, perhaps due to a lack of alternative suppliers.
Yet Beijing appears to be giving itself greater flexibility, with Emerson saying that China is buying ore carriers that improve the economics of long-distance shipping from Brazil and purchasing mines in Guinea.
“It’s entirely possible China, once it gets all three mineral provinces in a row — Guinea, Brazil and Australia — will play one off against the other to get a better price,” Emerson said.
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