Now, one commodity is almost single-handedly keeping the trade relationship afloat: iron ore.
Diplomatic relations between Australia and China fell into a deep chill one year ago, after Prime Minister Scott Morrison called for an independent investigation into the origins of the Covid-19 pandemic which threatened to challenge Beijing’s narrative of the viral outbreak.
But experts said that unlike wine and coal, it would be tough for China to find new sources of iron ore any time soon. That means Australia’s largest source of trade revenue may be secure.
“Australia is the largest iron ore producer in the world and on the other hand China is the largest steel producer in the world,” said Heiwai Tang, professor of economics at Hong Kong University Business School.
“It isn’t that easy for them to get into a new round of trade wars over this particular product.”
The mining boom
For more than two decades, China and Australia have helped rapidly grow each others’ economies through a soaring trade in raw resources, especially iron ore and coal.
The lack of diversity in Australia’s exports leaves it vulnerable to any major impact on its main sources of revenue, experts said. And while there could be other markets for the country’s iron ore, they might take time to develop.
“China’s making up around four-fifths of Australian iron ore exports, so what that tells me is we don’t have too many other destinations that we do business with in a…
Read More: Iron ore is saving Australia’s trade with China. How long can it last?