President Joe Biden announced a new Indo-Pacific security alliance (AUKUS) with Britain and Australia on 15 September. This first initiative under the alliance is a collaboration on making Australia the seventh country in the world possessing nuclear submarines.
This move is considered undoubtedly targeting China, and it is described as “obsolete cold war mentality and narrow-minded” that would “end up hurting their own interests” by Zhao Lijian, a Chinese foreign ministry spokesman.
By joining this new countering-China alliance, Australia is likely to see a loss from its major overseas market. China is Australia’s number one export market, with a record $127 billion of resources being exported to China in the year to July. This number accounted for 35% of Australia’s overall export volume in that year. However, China does not rely on Australia’s exports. Although when it comes to importing iron ore, Australia is the only choice, this major steel-consuming economy has a significant influence on the market. Over the past few months, the price of iron ore has gone down by 45%, as China adjusts its steel industry and moves towards a greener future.
China is also the largest source of international students, this trend started in 2001. In 2019, a total of 812,000 Chinese graduates moved to Australia for further education or starting a career, with 51% of them pursuing higher education. Such mass migration brought in $8.8 billion of revenue to Australia in 2019.
However, as tensions increase between the two countries due to the new security alliance, the trading relationship between China and Australia now sees many uncertainties.