As geopolitical uncertainty and US tariffs reset global trade relations, both sides ‘have to work together’, Australian business council says
A sense of “renewed optimism” between Australian and Chinese businesses has been fuelling efforts to create an environment where both sides can “live in harmony” and grow economically, according to the head of a leading Australian business association.
However, David Olsson, chairman of the Australia China Business Council (ACBC), also cautioned that while trade relations between the two nations had thawed recently, there was still a possibility that Beijing could reinstate trade barriers, which could affect businesses sharply, as geopolitical uncertainties persisted.
The message was delivered last week in an interview on the sidelines of the Boao Forum for Asia, an annual gathering of high-level officials, academics and business executives, in the southern province of Hainan, which ended on Friday.
“We want to work with China particularly as the influential power in the region to create that environment in which we can live in harmony, and that we can continue with economic development,” Olsson said.
“This is an important relationship to both of us. It is an important relationship to the Asia region generally because ... we are in one region in the world so we have to work together. That’s an imperative that will bring us together.”
China lifted its last trade bans on Australian exports in December after imposing restrictions in 2020 amid strained bilateral relations. Despite the thaw, uncertainties remain, including simmering tensions over security issues and economic risks from Washington’s tariffs.
Olsson said it had been a “difficult few years” for Australian businesses that were “deeply impacted” after trade ties with China went into “a deep freeze”.
Australian companies were cautiously weighing the risks and interests of re-entering the Chinese market, Olsson said, after high-level engagements helped to inject stability into the China-Australia business community.
They were “very aware” of how swiftly changing policies and uncontrollable external factors could significantly affect their operations, Olsson said.
“Diversification and management of risk is paramount in the thinking of all Australian companies. They know that you cannot be overreliant on any one market, as good as China is,” he said.
The US, Australia’s security ally, would “always be a good friend”, but amid uncertainties, Canberra needed to “recognise the policy settings” and adjust its foreign relations approach over time, Olsson said.
With a small population, the Australian economy relied heavily on foreign investment as well as exports, and it had to work through challenges when “friends turn out to be not so friendly”, Olsson said.
Australian mining giant Fortescue – the world’s fourth-largest iron ore supplier – held a positive outlook in its continuing collaboration with China.
“The fundamentals are still strong” in China’s economy, and demand for critical minerals was set to “far outstrip geopolitics”, said Fortescue Metals CEO Dino Otranto, who also spoke on the sidelines at Boao.
Olsson said Australian mining companies had been working “very closely” with Chinese firms and both sides were working towards building a “sticky” resources relationship.
Otranto said it was “really important” for both economies to maintain open trade flows, rather than reverting to isolated trade.
“There are some uncertainties at the moment,” Otranto acknowledged. “It is difficult to understand exactly when, if at all, it will play out.”
“What is really important is that we do not go back to having quite siloed trade flows because what we see, particularly here in China, is once you liberate and take the best of every region in the world, the overall prosperity of our people improves. And both Australia and China are direct beneficiaries of that,” Otranto said.
China learned “a lot of lessons” from the trade war launched during the first administration of US President Donald Trump, and diversified its markets away from the US, which could lessen the impact of uncertainties, according to Otranto.
Before Boao, Otranto attended the China Development Forum in Beijing, where he said he saw “much renewed optimism” among business leaders as the Chinese government vowed “seriously” to support the economy.
“Right now it is time for cool, calm heads that understand that the future will only happen if we all work together,” he said.
While Australian businesses would like to see much more foreign investment, including from China, such deals had faced heavy scrutiny, Olsson said. The extra attention stemmed from a combination of national security concerns and geopolitical tensions.
Tensions with China, exacerbated by trade disputes since 2020 and Australia’s deepening ties with US-led security policies – including the Aukus alliance and the Quad – have intensified the surveillance.
The heightened investment screening had slowed other pursuits in Australia, such as energy transition, which required Chinese technology and capital, causing “a bit of tension”, Olsson said.
He said that conversations among Australian businesses had shifted to how economic engagement with China would evolve in a transformed global landscape, where Australia could pursue productive trade and investment in some areas, while others, like technology, remained challenging.
“There’s a hope, and possibly an expectation, that Australia and China will use new energy [and] the green economy as basically the bedrock of our future economic relationship,” he said.
China has been Australia’s biggest trading partner for more than 15 years.
Otranto noted that while the next phase of bilateral trade was a continuation of resource exports, it would be expanded to include resources in “the sky”, such as solar and wind energy.
Aside from agricultural exports to China, Australia was now looking towards service sector exports such as elderly healthcare management, sports stadium designs, and agricultural land management, which were becoming “increasingly important” to China, and had emerged as an opportunity for Canberra, Olsson said.
