The government has said it will strengthen Australia’s economy and help businesses diversify as China becomes more “confident and assertive” and “willing to use its economic weight as a source of political pressure”.
“We have faced strategic competition before, including during the Cold War. But there are important differences this time around, most notably our highly integrated global economy and trading system,” Mr Frydenberg said in a keynote to the Australian National University’s Crawford Leadership Forum.
China is Australia’s largest two-way trading partner, accounting for over 30% of trade, and Mr Frydenberg said the country is “on the frontline of strategic competition”.
He said: “In many ways, our economies are complementary… however, it is no secret that China has recently sought to target Australia’s economy. Citing 14 so called ‘grievances’, covering everything from our foreign investment laws to our willingness to call out cyber attack. They have targeted our agricultural and resources sector, with measures affecting a range of products, including wine, seafood, barley and coal.”
Mr Frydenberg said that of those goods targeted by trade actions, total exports to China are estimated to have fallen by around $5.4 billion over the year to the June quarter. However, exports of those goods to the rest of the world have increased by $4.4 billion to countries including South Korea, India, Taiwan, Saudi Arabia, Singapore and Germany.
He also called out strong trading relationships with other countries like Japan, South Korea, the United States and the UK. Despite China’s actions, “our economy has continued to perform very strongly”, including an unemployment rate of 4.6%, and a record-high trade surplus of $28.9 billion in the June quarter, Mr Frydenberg added.
Supporting businesses and a stronger economy
Mr Frydenberg said that the Morrison government is taking steps to build a stronger, more dynamic and competitive economy, supporting businesses to diversify and adapt and securing critical economic systems and industries. Ways of building a stronger economy include:
• Lowering taxes for individuals.
• Providing business tax incentives to encourage investment.
• Supporting Australia’s digital transformation.
• Reducing regulation and making it easier for businesses to invest and grow.
• Investing more in skills, training and education.
Specific initiatives Mr Frydenberg mentioned include the $72.7 million Agri‑Business Expansion Initiative, to help farmers diversify and open new markets, reforming the Export Market Development Grants program, which provides support to around 4,000 small and medium-sized businesses every year, and reimbursing half of all eligible international marketing and promotional expenditure, up to a total of $150,000 per business each financial year.
Mr Frydenberg also mentioned the $1.3 billion Modern Manufacturing Initiative, the Supply Chain Resilience Initiative, which provides grants of up to $2 million to firms to help remove supply chain vulnerabilities for critical goods, and “defending the interests of our barley and wine exporters in the World Trade Organisation”.
Finally, he cited the $1.67 billion the government has committed to strengthen cyber-security capabilities.
