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Trade Tensions Alarms Australian Businesses

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As the tension between China and Australia grows, Australian businesses are facing the consequences as they continue to export a majority of their goods in China, an academic warns. 

Professor Clive Hamilton, who is banned from entering China, has told a parliamentary trade committee that Beijing has “weaponized” its trade relationships under the rule of Xi Jinping. 

Caught between the wrath of growing tensions between Australia and China are the winemakers with China in August launching an investigation into the price of imported wine. 

“Trade isn’t just trade when it comes to China under the Chinese Communist Part,” Prof Hamilton Said. 

“The CCP is the foremost practitioner of … economic blackmail as we’ve seen in Australia in recent months.” 

The Charles Sturt University public ethics professor said it was dangerous for businesses to assume the relationship with China was like any other nation. 

Prof Hamilton said if business wanted to keep trading with them, they had to accept the risks. 

“They have to understand that they are taking the risk of being used as a form of political manipulation, of becoming a weapon that Beijing will try and use against the Australian government,” he said. 

“They should not expect and nor will they ever be given political concessions or compensation.” 

He also raised concerns about another Australian export market heavily relying on China – higher education. 

“Australian universities are dangerously dependent on flows of revenue from China and the danger is principally the capacity of Beijing to interfere in the academic freedom and free speech on Australian campuses,” Prof Hamilton warned.  

“Universities are a special target for CCP influence operations because the party places an enormous emphasis over the struggle for ideas.” 

He called the Australia to follow the lead of universities in the US and Canada which have shut down Confucious institutes on their campuses for fear of spies. 

“I don’t believe they are appropriate for Australian campuses … we too in Australia should be closing them down.” 

Last month, Prof Hamilton was reportedly banned from entering China, according to state-run media agency the Global Times. 

On Thursday, Department of Foreign Affairs and Trade officials told the committee investigating the diversification of Australia’s trade and investment portfolios that it continues to support businesses to enter new markets. 

After China slapped a tariff on Australian barley in May this year, imports had drastically fallen. 

“There’s still a small amount of malted barley going to China but we expect that will stop over time,” a spokeswoman said. 

The suspension of beef exports from four Australian processors into China in the same month also resulted in a 46 percent fall between June and August, compared to the previous year. 

DFAT spokeswoman Alice Cawte said, economically, China remained an “extremely important” country to Australia. 

But Ms. Cawte said the relationship was “complex” as there were differences on issues in the region including the South China Sea. 

TECHNICAL OUTLOOK 

 

In the daily charts of AUD/USD, the pair opened at 0.7180 Friday morning in Sydney Session.  

The gains of the Aussie dollar has been short-lived and have realized losses in the end of the trading week for the start of October. 

As we can see on the chart, the price has bounced from the support level at 0.70157 on September 25, 2020. However, at the end of this week, the price took a down turn. This may be the start of the phase of the trend may continue lower breaking past the support level. 

Aussie bears are waiting for this phase and hoping that the price will break by next week amidst the ongoing trade conflicts between China and Australia.  

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