The world’s most China-reliant economy reels from virus shockwaves

The world’s most China-reliant economy reels from virus shockwaves

The coronavirus hit has exposed the extraordinary depth of Australia’s economic dependence on China and fueled questions over whether the nation is too reliant on the Asian behemoth.

That dependence is on display in the Western Australian coastal town of Geraldton, where an ocean “dragon” fires the incomes of local fishermen.

The longxia (龍蝦), literally “dragon shrimp” in Mandarin, is prized at celebrations in China for its rich red color, horns and spine that remind Chinese of the mythical creature. The coronavirus shutdown on the eve of Lunar New Year means Geraldton’s fishing fleet is stuck at port during this traditionally bountiful period.

Geraldton Fishermen’s Co-operative chief executive officer Matt Rutter estimates that the rock lobster catch between then and the end of March would normally be close to 2,000 tonnes, with a market value of more than A$120 million (US$78.3 million), but not this year — boat captains, deckhands, truck drivers, export packers and others have seen little work and even less cash.

“It’s the first time there’s been a stop on fishing,” Rutter said.

Australia is the most China-reliant economy in the developed world, with about one-third of its exports going there. Chinese nationals make up about 38 percent of its foreign students and 15 percent of its tourists.

“We’re getting a test run on what many people worried might have happened as a result of political tensions, but instead it’s a result of a health crisis,” said Richard McGregor, a senior fellow at the Lowy Institute in Sydney. “So we’ll see how the Australian economy holds up and we’ll get a test of the ability of various sectors like tourism and education to diversify their customer base.”

A shipment of honey illustrates how quickly the scales have turned.

In December last year, wellness and nutrition group Eve Investments struck its first deal with a Chinese distributor for organic honey from its Meluka Australia brand. The shipping container holding that order of more than 21,000 units from its property outside Ballina on the New South Wales north coast is now being held up on the docks in Sydney, awaiting clearance from its destination port in Shanghai.

“The biggest issue at the moment is one of logistics. With some of the ports sending people home, it does complicate getting product in there in a timely manner,” Eve Investments managing director Bill Fry said.

For now — like many Australian businesspeople — Fry remains fixed on the massive dividends a country of 25 million can reap by tapping into the demand of 1.4 billion people.

Longer term, the virus could drive demand for Meluka honey as people turn to products with medicinal value “to try and boost their immune systems,” Fry said.

Ben Woodward, who along with his two brothers runs the CaPTA Group, with nature parks and jungle tours across Far North Queensland, says the cascading effect of the coronavirus’ fallout is in a league of its own.

“This is uncharted territory,” he said. “It doesn’t just affect tourism, the spillover affects other industries like retail, transport, cafes and so forth as well.”

The family — whose business started in 1976 — has cut hours for some of the 200-odd staff across its butterfly sanctuary, wildlife reserve and other businesses.

It is smaller firms in Australia that are “working-capital dependent” that are most at risk, said Tim Toohey, a former chief economist for Australia at Goldman Sachs Group Inc.

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