Author: Benjamin Herscovitch, ANU
Even as the chokehold of Beijing’s economic coercion loosens, trade diversification remains the mantra in Canberra. The Anthony Albanese government has picked up, with gusto, predecessor Scott Morrison’s mission of getting Australian exports to more markets to offset perceived over-reliance on China.
In just shy of 18 months in the portfolio, Trade Minister Don Farrell has presided over the entry into force of free trade agreements with India and the United Kingdom, as well as pressing for progress on negotiations with the European Union. Meanwhile, Australia’s free trade agreement with ASEAN and New Zealand is being upgraded and the United Kingdom has joined the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
Despite these trade wins, there’s still a big Taiwan-shaped hole in Australia’s efforts to moderate its export dependence on China.
The Taiwanese economy sucked in a colossal AU$30 billion worth of Australian goods in 2022, making it Australia’s fourth biggest merchandise export destination. As well as eclipsing even India and the European Union, it was nearly 10 times more lucrative for Australian goods exporters than the United Kingdom and more than double as valuable as New Zealand. Australia’s goods exports to Taiwan’s market of just under 24 million people were worth approximately 40 per cent of the total goods exports to the 10-member state ASEAN market of 667 million people.
This doesn’t mean that Australia should abandon or downplay the importance of free trade agreements with India, the European Union, the United Kingdom and others. The long-term benefits for Australian exporters are likely to be especially great in the case of the trade agreements with the European Union and Indian markets given the size and wealth of the former and the stupendous growth potential of the latter.
But if it’s worth Australia’s energy to pursue a bilateral trade agreement with the United Kingdom or bring it into the CPTPP, then there’s a compelling economic case for doing the same with Taiwan — a market vastly more important for Australian exporters. This Taiwan oversight is particularly glaring when looking at the overall picture of Australia’s trade ties.
Despite shared membership of the World Trade Organization and Asia–Pacific Economic Cooperation, Taiwan is conspicuously absent from Australia’s free trade agreements. Of Australia’s top 10 export destinations in 2022, Taiwan was the only one in which Australian exporters didn’t enjoy the benefits of either a bilateral or regional free trade agreement.
True, Australia’s exports to Taiwan by value are dominated by energy and minerals, which don’t face high tariffs. But with agricultural imports to Taiwan subjected to average tariff rates of nearly 16 per cent, a free trade agreement would give Australian primary producers a competitive edge in one of Asia’s wealthiest consumer markets. Given that it was Australia’s wine growers and lobster fishers that suffered most at the hands of China’s economic coercion, there is a powerful case for gaining better access for Australian agricultural products in reliable export markets like Taiwan.
Regardless of the economic logic, any push for freer trade with Taiwan can’t escape the constraints of geopolitics.
Getting Taiwan into the CPTPP will probably remain an implausibly long shot given Beijing’s competing bid and opposition to Taipei joining combined with the trade pact’s consensus-based accession process. But that still leaves open the option of pursuing a much more achievable bilateral free trade agreement with Taiwan. With Australia already Taiwan’s seventh-largest trading partner, this is an option that Taipei also supports.
Having pressured Canberra out of its previous plan to negotiate a free trade agreement with Taipei during the Malcolm Turnbull government, Beijing would oppose moves to formally liberalise trade.
Although Singapore and New Zealand already have free trade agreements with Taiwan, these were signed in 2013 when the more Beijing-friendly Nationalist government was in power and when China wasn’t trying so hard to internationally isolate Taipei. Despite likely opposition from Beijing, the Albanese government shouldn’t allow its trade access agenda to be held hostage to Chinese government concerns. Not least because Beijing’s enthusiasm for relationship repair probably gives Canberra more licence to take positions that China doesn’t like.
Since mid-2022, Beijing has…
Getting Vietnam’s economic growth back on track
Vietnam’s economy grew 8% in 2022 but slowed in 2023 due to falling exports and delays in public investments. The economy’s future depends on structural reforms and reducing dependency on foreign investment.
Vietnam’s Economic Roller Coaster
After emerging from COVID-19 with an 8 per cent annual growth rate, Vietnam’s economy took a downturn in the first half of 2023. The drop was attributed to falling exports due to monetary tightening in developed countries and a slow post-pandemic recovery in China.
Trade Performance and Monetary Policy
Exports were down 12 per cent on-year, with the industrial production index showing negative growth early in 2023 but ended with an increase of approximately 1 per cent for the year. Monetary policy was loosened throughout the year, with bank credit growing by 13.5 per cent overall and 1.7 per cent in the last 20 days of 2023.
Challenges and Prospects
Vietnam’s economy suffered from delayed public investments, electricity shortages, and a declining domestic private sector in the last two years. Looking ahead to 2024, economic growth is expected to be in the range of 5.5–6 per cent, but the country faces uncertainties due to geopolitical tensions and global economic conditions.
Thailand’s post-pandemic economic recovery still trailing behind
Thailand’s economy is struggling to recover from the impact of the COVID-19 pandemic, with slow growth in GDP and GDP per capita. The government has implemented short and long-term policies to address economic challenges.
## Thailand’s Economic Slowdown
Thailand’s real GDP and GDP per capita have yet to outpace pre-pandemic figures, unlike other ASEAN countries. The Thai economy was severely affected by the pandemic, causing a slow economic recovery. The country’s large informal economy and dependence on tourism made it particularly susceptible to the impacts of the pandemic. While economic growth in 2023 was driven by activities in the travel sector, the manufacturing sector continued to contract, and merchandise exports continued to decline.
## Government’s Economic Policies
The new government’s short-term economic policies include providing a one-time digital cash payment to approximately 50 million residents, debt relief measures, and efforts to cut energy and electric train costs. Long-term economic measures consist of new free trade agreements, green industry projects, and a land bridge project. However, these measures have faced criticism from Thai economists due to significant fiscal implications and rising public debt-to-GDP ratio.
## Challenges in International Trade and Industrial Policies
Thailand’s new government is looking to boost international trade through free trade agreements. However, concerns are raised regarding the effectiveness of FTAs in driving global value chains and boosting trade. Additionally, industrial policies that emphasize domestic value added are being reconsidered in light of evidence that it runs counter to development from engaging in global value chains. The success of Thailand’s economic growth goals will depend on how supply-side constraints are addressed and resolved.
The United States and China’s complex cooperation and rivalry continue
The US-China relationship in 2023 had complex economic and technological dynamics. While trade remained substantial, there’s also intensified technological competition, as both countries seek to enhance communication and cooperation in 2024.
Economic and Technological Dynamics
The world has witnessed a complex tapestry of economic and technological dynamics between the United States and China, with 2023 marking a period of continued economic interdependence and technostrategic rivalry. Despite a nominal dip in US imports from China, bilateral trade volumes remained substantial. US exports to China totalled US$135.8 billion and imports stood at US$393.1 billion for January–November 2023.
Economic Relations and Tensions
Policymakers, cognisant of the perils inherent in economic decoupling, have started to eschew such a course. High-level meetings and initiatives offered a positive glimpse of potential bilateral relations. In contrast, the high-tech landscape in 2023 was tense. The United States reinforced its global stance against China’s ascendancy, supported by US political parties.
Moving into 2024, the US–China economic and technological relations are poised to undergo a shift, characterised by enhanced communication, selective cooperation, and balanced management of both interdependence and competition. There is a mutual understanding among senior officials of the potentially devastating repercussions associated with misunderstandings and miscalculations in the US–China relationship. 2024 is expected to witness increased economic dialogues between Beijing and Washington.
- Canberra ties the knot with Washington
- 2024 China IIT Reconciliation: Appointment Through IIT App Opens on February 21st
- The Year of the Dragon brings record-breaking travel and consumption during the 2024 Chinese Spring Festival
- China’s Minimum Wage Guide (Updated as of February 19, 2024)
- Getting Vietnam’s economic growth back on track
- Legal Ways to Manage Sensitive Personal Information in China