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Among the many former British colonies that have grown into some of the world’s most
developed countries, Australia is unique.
Specifically, its economy has developed into something unlike that of any other, and a
big player in the story of that economy is China… for better or worse.
To understand China’s role in Australia and the problem this poses down under, one
has to start in a very different place—the United States.
If it were not for the US, Australia might not exist.
Prior to the American Revolutionary War, Britain would primarily send their prisoners to the
American colonies when sentenced to transportation.
Once the colonies became the independent country of the United States, Britain needed to find
a new place to put their convicts and for that, they chose what is now Sydney.
The first fleet of convicts who arrived in Botany Bay were the origins of what is now
the country of Australia, and they might not have made the long trek to there if not for
the founding of the United States.
Beyond just this, the history of Australia and the history of the US are eerily similar
and interlinked.
The two country’s foundings are offset from each other by 180 years, but parallel significantly.
Australia is almost the exact same size as the contiguous United States, and even has
similar dimensions to the US.
Both nations include similarly diverse landscapes and climates, and both started in the east.
They then each expanded west, taking over indigenous land, largely fueled by the discovery
of gold and its subsequent mining.
While the scale is obviously quite different, both nations were quite isolated by distance
to the European world, although close to a number of other European colonies.
Both nations started with their small British populations but then grew primarily through
immigration from English-speaking countries, secondly through immigration from non English-speaking
European countries, and thirdly through immigration from the rest of the world.
They even share the same story in the founding of their capital cities—they each built
a planned city in a central location between their two major population centers as to not
favor one over the other.
The similarities go on and on, but the point is that Australia and the US were largely
dealt the same cards, but got vastly different results
The US quickly developed into one of the most politically, economically, and socially powerfully
countries on earth with a population well over 300 million.
Australia, however, never grew into more than a small, regional power, with a small population
of just 25 million.
Now, Australia is no doubt a highly successful nation.
It’s among the world’s most wealthy countries, the world’s most developed countries, it
has one of the world’s lowest unemployment rates, one of the world’s lowest poverty
rates, and is one of the highest scoring in the world happiness index.
What the country is definitively not, though, is a superpower.
While you can never forget the role of pure chance, given the similar starting position
of both countries, the first thing one has to look at for a reason behind this is Australia’s
geography.
Despite their similar sizes, what differentiates Australia from the US is its desolation.
About 35% of the landmass is considered desert, which generally cannot sustain large population
centers.
There are of course exceptions to this, most notably in the Middle East where huge cities
such as Dubai, Doha, and Riyadh sprung up in the middle of deserts, but each of these
largely developed as a result of oil booms in their respective countries.
While the deserts of Australia do have oil deposits, none of these are at a similar scale
to those of the Middle East, have not been significantly exploited, and, in addition,
it’s largely Perth, on the western coast, that has emerged as a hub for oil, rather
than an inland city.
With limited arable land and a harsh climate, the inland of Australia just isn’t conducive
to most human life.
That results in a fairly striking population density map.
Just five major population centers have emerged—Brisbane, Sydney, Melbourne, Adelaide, and Perth.
Each of these is directly on the coast.
The largest city in Australia that’s not directly on the coast, in fact, is Canberra—the
capital—which has a population of just 400,000 and was a planned city, meaning its development
cannot be a perfect indicator for the viability of inland life in Australia.
Even then, it sits a mere 70 miles or 115 kilometers from the coast.
If you’re talking about population centers that are significantly offset from the coast,
in the outback, as it’s called, the largest would probably be Alice Springs—a northern
territory town of just 24,000.
This desolation can be further exemplified by the country’s road network.
The primary highway linking the population centers of Brisbane, Sydney, Melbourne, and
Adelaide to Perth is just a single, two-lane road, traversing the southern coast of the
country.
The same is the case for the Stuart highway which serves as the primary link from the
south coast to the north coast up the center of the country—it too is just a two-lane
road.
What this all means is that much of Australia’s land just doesn’t lend itself to the development
of large-scale human settlements, leaving it fairly empty.
Australia’s vastness served a crucial role in developing it into one of the world’s
wealthiest economies, though.
The country is now the world’s largest exporter of minerals.
It has huge amounts of coal, iron, lead, diamonds, gold, uranium, and more, mostly in its vast,
open, outback.
That means that the primary economic activity in Australia’s interior is mining, and with
natural resources making up a majority of the country’s exports, it were these minerals
that played a major part in growing Australia into a wealthy economy.
They also cemented who Australia’s economic partners would be.
Nearly 30% of Australia’s exports go to China, primarily driven by China’s significant
demand for minerals.
China, in fact, in the number one spot, buys more from Australia than the number two, three,
and four countries combined—Japan, the US, and South Korea.
Beyond just Chinese companies buying minerals from Australian mining companies to use in
their factories, there are also sizable amounts of investment coming in from Chinese companies.
Overall, it’s safe to say that the Australian mining sector would not be what it is without
China, but Australia also relies on the billion people up north to act as customers for another
crucial aspect of their economy—education.
As strange as it might sound, universities, which in most cases are non-profits, form
a sizable part of the Australian economy as Australian universities are some of the most
successful in the world at attracting international students.
The country is home to about 875,000 international students across all types of
schools.
Now, of course, remember, the entire population of Australia is only about 25 million.
What that means is that, in the entire country, 1 out of every 28 people are international
students.
Of these international students, the highest proportion, by far, are Chinese, at 30%.
That represents a quarter of a million Chinese students studying in Australia.
On the flip side, that means that at any given time, 1 out of every 5,000 Chinese people
are studying in Australia.
Within universities, Chinese make up 10% of the average student body, however, considering
they tend to cluster together, certain universities have far higher proportions.
At UNSW the proportion is 23%, at the University of Sydney, it’s 24%, and numbers are similar
at other hotspots.
All in all, these Chinese students contribute more than about $10 billion a year to the
Australian economy.
There are also plenty of other sectors that play a part of China’s huge economic influence
in Australia such as tourism, manufacturing, services, and more.
Given how much the two economies are interlinked, therefore, as China has risen, so too has
Australia.
This link to the success of one of the biggest economic success stories ever has helped Australia
earn an impressive record.
It has gone 28 years, since 1991, without a recession.
While the rest of world struggled through the Asian Financial crisis, the collapse of
the dot-com bubble, and the Great Recession, Australia just kept on going with quarter
after quarter after quarter of economic growth.
By most measures, in modern history, no developed country has ever gone such a long period without
a recession.
But this all, of course, has a flip side.
Such heavy economic reliance on a country that politically, Australia doesn’t always
agree with is dangerous.
An Australian-Chinese trade war would certainly cause a lot more damage down under than up
north.
At the same time, there are quite a few efforts by China to influence Australia.
China has made plenty of attempts to tip politics in the country in their favor.
As one, small example, Chinese Communist Party run or affiliated WeChat accounts, a popular
social network in China, released posts critical and mocking of Australian politician and current
prime minister Scott Morrison in the run-up to the May, 2019 Australian election.
Beyond that, the Chinese government has been known to unofficially sponsor certain pro-China,
ethnically-Chinese candidates for various Australian offices through a variety of methods.
In media, China has been known to impart vast control over Chinese-language outlets in Australia
and responds harshly to criticism through defamation lawsuits and more.
On university campuses, the Chinese Communist Party is known to have vast amounts of influence,
with accusations that the government has built spy networks within Australian universities
to monitor Chinese students and their political views.
In one instance, a Chinese student studying in Brisbane participated in a rally supporting
the anti-Beijing protests in Hong Kong, and days later, the student's family back in China
were visited by the authorities.
There is a very clear but unspoken threat by China to Australia—if you make things
difficult for us politically, we’ll make things difficult for you economically.
How things typically work in China is that, in order to achieve business success, even
when running a fully private company, one needs to be cosy with the Chinese Communist
Party that runs the government.
Therefore, even if a Chinese company is fully private, it knows that it needs to act in
a way that aligns with China’s politics.
Of course, while some of China’s tools of economic warfare are more traditional, like
tariffs, a lot of its influence stems from the actions of the private sector.
Any private Chinese company knows that, if Australia suddenly took a hard pro Hong Kong
independence stance, for example, the CCP might not be happy about continued business
with the country.
Australia’s therefore in a tricky spot where it’s a western country socially and politically,
but in many ways, an eastern country economically.
As a result, taking a political stance against any actions by China comes at a much higher
cost than that of a less economically linked country.
Australia quite literally cannot afford to lose China.
A trade-war with China on the scale of the US’ would devastate the Australian economy.
China no doubt has done wonders for Australia, but the point is that too much reliance on
any economy, no matter how strong that economy may be, is a risky strategy.
When that strong economy is run by a foreign government that can adjust its flows in an
instant, that’s even riskier.
According to one study run by the Reserve Bank of Australia, if China’s GDP contracted
by just 5%, that would result in Australia’s GDP falling by 2.5%.
That is a clear-cut case of economic reliance, so, if Australia wants to keep up its unprecedented
period of economic growth irregardless of how China’s doing, diversification is crucial.
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