Australia Elections: China is Life or Ballast?

The upcoming legislative elections in Australia—expected September 7th—view China as one of the principle areas of contention between the outgoing government and the opposition.  According to polls, conservatives will likely replace the labor party, which is perceived as divided, ineffective and indecisive.  There are undoubtedly ideological differences between the two parties as well as differences in agendas: the labor party is more likely to consider immigration as a manageable asset.  On the other hand, the Liberal Party is more sensitive to the Anglo-Saxon identity of the country and supports reduced and selective immigration policies, even from China.  Moreover, they criticize the exiting government’s carbon tax because it indiscriminately penalizes industrial activities.  It was not a coincidence that Prime Minister, Kevin Rudd, lightened the severity of anti-carbon monoxide emission laws launched by his predecessor’s colleague, Julia Gillard.  In any case, China plays the central role, in full harmony with the importance it has acquired in the Australian economy.  In a sort of ironic dualism, Beijing creates satisfaction and agreement; while it distances present problems, it draws future anxieties closer.  The crisis triggered in 2008 was almost unheard of in Australia.  The recession was avoided in the northern part of the Pacific hemisphere because China—the other economic powerhouse that continued to progress—threw Australia a lifesaver.  The well-paid assist took the form of gigantic container ships that transported inexhaustible amounts of iron, coal and natural gas to China.  The raw materials are the essential lymph of Chinese factories, necessary nourishment for the obsessive growth of China’s GDP, and a component of a production apparatus that guarantees availability of continually improved goods at diminishing prices.  For a “mineral nation” like Australia, Chinese demand was the solution to the crisis.  The prices of raw materials have been rising, and Beijing’s participation has created wealth and employment.  Canberra’s balance of trade with Beijing is actually in the black, confirmation of its raw materials’ necessity.  However, on the flip side of gratitude is dependency.  China is not only its major commercial partner, but also the recipient of 36% of Australia’s exports (second-place Japan received 18%).  For 63 years, since great quantities of wool were destined for the United Kingdom, no other country has been so central in relations with Australia.  Exports to China are equivalent to 5.7% of Australia’s GDP.  Beijing has not limited itself to obtaining raw materials: it intends to acquire mining businesses and more immigration permissions for its workers and students.  For this reason, opinions and decisions move to an essentially more political platform.  Furthermore, Beijing’s slowing presents a number of questions and uncertainties regarding Australia’s economic future.  What will happen if China’s economy slows down (which is probable)?  What will happen if the idea of a different GDP composition prevails in Beijing, such as a greater focus on consumption and services?  An indicator of the situation can already be seen in decreasing orders for mining machines.  In the end, a reduction in Chinese growth could favor the transfer of capital to Australia as well, making undesired increases in interest rates inevitable.  This explains why China has inserted itself so strongly in electoral campaigns: for business, public opinion, and industrial leaders. For the time being, preoccupation over the future is winning compared to immediate compensation, as if Beijing’s help is feared as a lethal embrace rather than a lifeline.