London Daily

Focus on the big picture.
Tuesday, Jul 22, 2025

Australia sees ‘partial economic decoupling’ from China as Canberra weighs risks of over reliance after coronavirus disruptions

Australia sees ‘partial economic decoupling’ from China as Canberra weighs risks of over reliance after coronavirus disruptions

Parliamentary inquiry examined the vulnerability of supply chains, defence and foreign affairs after supply chains collapsed at the height of the coronavirus outbreak. Experts argued there was a critical need for Australia to plan its own network of supply chains to shore up sovereign resilience, with a need to drift away from China

Australia is edging towards a “partial economic decoupling” with China as a result of the coronavirus pandemic, a new Australian parliamentary inquiry has heard.

In a new inquiry set up in May to examine the vulnerability of Australia’s supply chains, defence and foreign affairs, experts argued there was a critical need for Australia to plan its own network of supply chains to shore up sovereign resilience with a need to drift away from China.

The inquiry, findings of which could feed into state policies, followed an earlier debate in February when supply chains collapsed at the height of the outbreak in China.

Evidence submitted has highlighted that Australia has become too reliant on China as a result of a government push to capitalise on the world’s second largest economy.

“For Australia, a key takeaway is that although we may hope for reconciliation [with China], the odds favour a partial separation,” according to a submission by Alan Dupont, chief executive of geopolitical risk consultancy, The Cognoscenti Group.

Dupont said Australia’s decoupling from China “is not an attempt to isolate China … but rather to establish a sustainable relationship” between China and the United States as the world is dividing into two competing trading and geopolitical blocs.

He said that Australia may be able to stay in a trading bloc with China and a security bloc with the US, but there is a growing possibility that Australia has to take sides, and if Canberra sides with Washington, the bilateral free trade agreements with Beijing and other countries will not hold.

Dupont puts forward the possibility the world could split into a China bloc including Russia, most of Southeast Asia, the Middle East and some countries in Africa and Latin American and a US bloc containing most of the European states and a share of some Asian, Latin American and African countries.

Australia is the world’s most China-dependent economy, accounting for 33 per cent of its exports. China is also Australia's largest two-way trading partner in goods and services, reaching a record A$235 billion (US$163 billion) in the financial year ending June 2019.

Australian pharmaceutical company, the Institute of Drug Technology, gave evidence at the hearing at the end of June that the coronavirus pandemic supported the need to treat the supply of medicine as a sovereign importance.

The inquiry revealed Australia’s particular vulnerabilities in supply of medicines and fuels as it imports 90 per cent, according to a submission by the Institute for Integrated Economic Research.

The institute said Australia’s vulnerability is exacerbated by its geographical position at the end of “long global trade routes” that were “heavily reliant on just in time supply chains” and had a “low tolerance for loss and disruption”. It argued that Australia needs a “smart sovereignty” supply chain model to cut reliance on imports.

The Institute for Integrated Economic Research advocated a “smart sovereignty” supply chain model for Australia which would include more Australia-based manufacturing with domestic supply chains, research and development facilities and a more skilled workforce allowing Australia to control critical sectors.

At the same time, it warned that a country with a small population like Australia – 25 million compared to 1.4 billion in China – should not go the extreme in seeking self-sufficiency to follow the “America First” style, referring to US President Donald Trump’s hallmark economic policy.

“This ‘America first’ model should not be a source of reassurance for us … it should serve as yet another warning sign of what is to come,” Institute for Integrated Economic Research chairman, John Blackburn, said.

When asked how the Australian public be convinced to buy more expensive locally made products in an effort to build local supply resilience, Blackburn said more open discussions needed to be conducted to increase their awareness of the need for sovereign resilience.

“We are a pretty wealthy country … so it is important for us to pay a little bit more for stuff made in Australia, because if something goes wrong, you know you are going to have that medicine for your child,” he said at the hearing.

Last week, former Australian foreign minister Gareth Evans, who held his post in previous governments which were open to working with Asia, told the South China Morning Post while there calls for more diversification from China, the notion of a complete decoupling was “nonsensical”.

“Australia has got it that our future lies with our geography and not our history … governments generally do get it,” he said.
“Unquestionably, our economic future is with China and the wider region. We have to recognise that and work within that framework.

“Both sides would be crazy to walk backwards from that.”

Newsletter

Related Articles

0:00
0:00
Close
US Treasury Secretary Calls for Institutional Review of Federal Reserve Amid AI‑Driven Growth Expectations
UK Government Considers Dropping Demand for Apple Encryption Backdoor
Severe Flooding in South Korea Claims Lives Amid Ongoing Rescue Operations
Japanese Man Discovers Family Connection Through DNA Testing After Decades of Separation
Russia Signals Openness to Ukraine Peace Talks Amid Escalating Drone Warfare
Switzerland Implements Ban on Mammography Screening
Japanese Prime Minister Vows to Stay After Coalition Loses Upper House Majority
Pogacar Extends Dominance with Stage Fifteen Triumph at Tour de France
CEO Resigns Amid Controversy Over Relationship with HR Executive
Man Dies After Being Pulled Into MRI Machine Due to Metal Chain in New York Clinic
NVIDIA Achieves $4 Trillion Valuation Amid AI Demand
US Revokes Visas of Brazilian Corrupted Judges Amid Fake Bolsonaro Investigation
U.S. Congress Approves Rescissions Act Cutting Federal Funding for NPR and PBS
North Korea Restricts Foreign Tourist Access to New Seaside Resort
Brazil's Supreme Court Imposes Radical Restrictions on Former President Bolsonaro
Centrist Criticism of von der Leyen Resurfaces as she Survives EU Confidence Vote
Judge Criticizes DOJ Over Secrecy in Dropping Charges Against Gang Leader
Apple Closes $16.5 Billion Tax Dispute With Ireland
Von der Leyen Faces Setback Over €2 Trillion EU Budget Proposal
UK and Germany Collaborate on Global Military Equipment Sales
Trump Plans Over 10% Tariffs on African and Caribbean Nations
Flying Taxi CEO Reclaims Billionaire Status After Stock Surge
Epstein Files Deepen Republican Party Divide
Zuckerberg Faces $8 Billion Privacy Lawsuit From Meta Shareholders
FIFA Pressured to Rethink World Cup Calendar Due to Climate Change
SpaceX Nears $400 Billion Valuation With New Share Sale
Microsoft, US Lab to Use AI for Faster Nuclear Plant Licensing
Trump Walks Back Talk of Firing Fed Chair Jerome Powell
Zelensky Reshuffles Cabinet to Win Support at Home and in Washington
"Can You Hit Moscow?" Trump Asked Zelensky To Make Putin "Feel The Pain"
Irish Tech Worker Detained 100 days by US Authorities for Overstaying Visa
Dimon Warns on Fed Independence as Trump Administration Eyes Powell’s Succession
Church of England Removes 1991 Sexuality Guidelines from Clergy Selection
Superman Franchise Achieves Success with Latest Release
Hungary's Viktor Orban Rejects Agreements on Illegal Migration
Jeff Bezos Considers Purchasing Condé Nast as a Wedding Gift
Ghislaine Maxwell Says She’s Ready to Testify Before Congress on Epstein’s Criminal Empire
Bal des Pompiers: A Celebration of Community and Firefighter Culture in France
FBI Chief Kash Patel Denies Resignation Speculations Amid Epstein List Controversy
Air India Pilot’s Mental Health Records Under Scrutiny
Google Secures Windsurf AI Coding Team in $2.4 Billion Licence Deal
Jamie Dimon Warns Europe Is Losing Global Competitiveness and Flags Market Complacency
South African Police Minister Suspended Amid Organised Crime Allegations
Nvidia CEO Claims Chinese Military Reluctance to Use US AI Technology
Hong Kong Advances Digital Asset Strategy to Address Economic Challenges
Australia Rules Out Pre‑commitment of Troops, Reinforces Defence Posture Amid US‑China Tensions
Martha Wells Says Humanity Still Far from True Artificial Intelligence
Nvidia Becomes World’s First Four‑Trillion‑Dollar Company Amid AI Boom
U.S. Resumes Deportations to Third Countries After Supreme Court Ruling
Excavation Begins at Site of Mass Grave for Children at Former Irish Institution
×