Some in Australia seem keen to disengage from China, but this disengagement may also mean disengagement from protocols, procedures and evolving cross-border trade transaction processes within the broader Asian region and not just limited to China.
These are issues NT export businesses and government need to consider because they impact on our ability to trade within our region. The Belt and Road Initiative, poorly understood and much maligned by anti-China hawks, underpins a new trading environment from which Australia has excluded itself.
This lack of knowledge and the peddling of disinformation will impact on the ability of NT business to engage with China and the region and on the ability to attract investment capital. Following the Global Financial Crisis, Australian recovery depended upon China’s recovery and its massive stimulus program.
Australia’s recovery from Covid-19 will also depend to a large extent on China’s recovery and Australia’s reactions. All of this makes for an uncomfortable trading and business environment where normal trade activity is recast as an attack strategy or is somehow unpatriotic. This type of thinking has a substantial impact on the way the NT recovers from Covid because the NT depends on export markets to a greater extent than almost any state, other than West Australia. Exports include the “import” of tourists and, in particular, the developing flow of tourists from China.
The Australian relationship with China has broader impacts other than just China. Our northern neighbours with whom we do trade are also heavily engaged with China. ASEAN, the major trading target for the Northern Territory, is China’s largest export market. They do not use a megaphone to scold China for real or imagined slights because they understand the separation between the politics of China and trade with China.
The idea that China is expansionist or that China wants to interfere in the internal politics of countries in Asia is not generally accepted by our northern neighbours. This has two relevant impacts for the Territory. The first impact is willingness to do business with a neighbour who is not on good terms with their largest trading partner.
Call it a contamination factor. Australia has taken to scolding not only China, but other countries in the region who are more diplomatic in their approach to doing business with China. This does not sit well with Asian trade partners. Chinese consumers are not short for choice and consumer perceptions of suppliers do make a difference to buying decisions. The clean and green branding lies at the heart of Australian marketing campaigns so it’s foolish to suggest that the aggressive Australian media coverage of China will not have an impact on consumer perceptions of Australia.
Australian milk powder competes with milk powder from Belgium, France, Denmark, Switzerland, and others. Australian wine sits alongside the best wines from France, Italy, and the New World. Australian commodities such as barley compete against an increasing flow of subsidised grain from the United States as part of the newly signed US-China trade agreement.
Northern Territory business engagement takes place against a highly competitive background so we cannot afford complacent thinking about China’s need for Australia. The second impact comes with the way business is conducted in this northern region. Effective Covid control responses have rested more heavily on advanced 5G and artificial intelligence with big data analysis than the Australian responses.
This uptake will accelerate a more sophisticated use of e-commerce and e-trade solutions in the region. Australia is keen to ban Huawei and exclude its superior 5G technology from Australia. Asia does not share this enthusiasm and the result may be the development of two distinct and incompatible cyber domains. The software architecture of South East Asia may come to owe more to Chinese standards and protocols than to US standards.
The US refusal to engage with bodies that set global standards because China is also involved means that we lose the opportunity to enjoy the benefits of global standards that help build frictionless trade. Older readers will remember the time when you needed different phones for the US, Australia and Japan because the operating standards were different. Back then those differences were irritating.
Now, those types of differences can have major impacts on the ability to efficiently trade. Emerging above all of this is the recent launch of China digital currency. This is not a crypto currency bit-coin exercise. This is a sovereign currency backed by the State. It’s built on block chain distributed ledgers. One of the objectives is for the digital currency to offer alternatives to the dollar-based and US controlled SWIFT trade settlement system.
It is a tool that removes the ability of the US to apply trade sanctions by unilaterally denying SWIFT access. Rio Tinto recently completed its first blockchain-based “intelligent contract” using the platform developed by Swedish-based company ChinSay. While it usually takes several days for commodity contracts to settle, the companies were able to complete the fully digitalised trade in under two hours. This is a path to the future of cross border transactions with China and within our northern region.
NT exporters can choose to ignore this and go to the back of the line with incompatible or outdated procedures. Or they can embrace the new process and trade on equal terms with all of China trade partners. This is where the future of China engagement lies.
Understanding and engaging in this future requires us to look beyond the misleading and aggressive headlines in today’s media. TQ