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29 billion reasons why Queensland politicians are never rude about China

Business

Queensland will be in the firing line if an Australia-China trade war breaks out. Is there anything we can do about it except keep smiling? Robert MacDonald investigates

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You’ll never hear a Queensland Government minister be rude about China – even when it takes decisions that could cost the state thousands of jobs.

Quite the opposite in fact.

“We have no beef with China,” Agriculture Minister Mark Furner declared, with an apposite turn of phrase, in State Parliament last week, just days after China’s sudden decision to suspend beef imports from four big Australian abattoirs, three of them in Queensland.

The villains, in Furner’s eyes,  were those suggesting China was up to no good.

“Any LNP member who criticises our trade relationship with China should hang their heads in shame,” he said.

Premier Annastacia Palaszczuk, too, offered no criticism of the Chinese when the news broke, even though she predicted more than 3200 workers could be impacted.

The boldest she got was to say she’d be writing to Prime Minister Scott Morrison and Trade Minister Simon Birmingham in a bid to stop a “full-blown trade war”.

Not that anyone in a position of power is yet formally calling it a trade war. The Chinese say the suspension of beef imports was for technical and labelling reasons and the Federal Government is playing a straight bat and not saying otherwise.

There are, however, plenty of others, including members of the Coalition backbench, who have found it easy to join the dots between the beef ban and China’s quaintly expressed dissatisfaction of Australia’s role in pushing for an independent inquiry into China’s role in the COVID-19 pandemic.

Have we ever before been called “a giant kangaroo that acts as the dog of the US”.

China’s recent decision to slap an 80 per cent tariff on Australian barley, claiming trade rules were being breached, and reports it has told its power stations to use local, rather than Australian thermal coal have added fuel to the China hawks’ speculation.

Whatever the case, it’s absolutely sensible for Queensland to stay out of the stoush and not just because this is a nation-to-nation matter, which wouldn’t be helped by states throwing in their two bobs’ worth.

The simple truth is that, over the past decade, China has become Queensland’s golden goose.

Ten years ago, we sold China $6.5 billion worth of goods – or 13 per cent of our total manufactured exports.

Last year, China bought more than $29 billion of our coal and LNG and beef and other products, accounting for more than a third of our total international sales.

China is also, or was until the COVID-19 pandemic, our biggest inbound tourism market. More than 500,000 Chinese visited Queensland last year and  spent more than $1.6 billion in the state.

It was also our largest source of international students – 135,000 enrolments last year, or more than 20 per cent of the total.

But what now, especially now that our international tourism and student markets have collapsed for who knows how long?

What actually happens to Queensland if the diplomatic sniping between Australia and China turns into Palaszczuk’s feared-for “full-blown trade war”?

In all likelihood, it will all be temporary. China will continue to need high-quality thermal (and coking) coal and Queensland’s is the best there is.

The demand for predictably safe animal protein and barley for brewing Tsingtao beer will, presumably, keep growing.

And the current diplomatic tensions will eventually fade after each side feels they’ve made their point – whatever that point might be.

But it does raise the question of what Queensland can do to reduce its reliance on China.

Queensland’s exports have grown strongly in the past decade – from $49 billion in 2010 to $85 billion last year – a nearly 75 per cent increase.

But take out China’s remarkable more than-trebling of demand for Australian products over that period and the increase falls to a more modest 33 per cent.

There has been strong growth in individual markets over that time. Sales to ASEAN nations have increased by about 150  per cent, to around $7.6 billion last year. But that’s actually 10 different markets, each needing its own market entry strategy.

And our exports to the Middle East have more than doubled. But they are still only worth a relatively modest $1 billion or so.

Sales to India have jumped by 60 per cent, to more than $10 billion, making it one of our most promising markets.

But cracking the Indian market is hard work. As Trade and Investment Queensland notes, “engaging with India requires a long-term strategic focus and commitment.”

Japan has long been our most reliable customer, buying around $11 billion of Queensland goods and commodities last year. But it’s a mature market and future growth is limited.

Korea has performed well for Queensland, with a 50 per cent jump in imports in a decade to nearly $10 billion. But it too, is an increasingly mature market.

All of which is to say, if Queensland wants to keep underwriting its quality of life by selling things to the rest of the world, it needs to maintain good relations with China, whether we like it or not.

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