Australia well-placed to weather possible US-China trade wars

Australia is a good position to weather a potential trade war between the United States and China according to panellists at a forum in Sydney hosted by the Asia Society Australia and Bloomberg.

“Things will slow, there is no doubt about that,” said Mark Whelan, ANZ’s Group Executive – Institutional. “But for the underlying trade and the products we are supplying into the region, we are pretty well placed. Whether its agriculture, hard commodities, tourism, other services like education … we have good relationships and I feel that will continue.”

The region could also see more intra-regional trade with the emergence of different trade corridors as a fallout of the trade tensions between the United States and China.

 “The corridors our customers are playing and that is what we are focused on – Australia, New Zealand and Asia and Asia back into Australia and New Zealand, we feel that will stand through these issues,” said Mark. 

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“The corridors our customers are playing and that is what we are focused on – Australia, New Zealand and Asia and Asia back into Australia and New Zealand, we feel that will stand through these issues” 
mark whelan, group executive, institutional, anz

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Trade flows between Australia and Asia are at healthy levels - around 70% of all Australian goods are exported to Asia Pacific, and within that 70% about 30% exported to China.

The discussion was part of a new executive forum called Asia Briefing – Live centred on Asia and Australia engagement in the region, organised by the Asia Society Australia. The Asia Society is a global non-profit think tank established in 1956 to promote closer ties between Asia and the West.

SENTIMENT HURT

The immediate effect of increasing trade protectionism to the Chinese economy has been a negligible 0.2% of GDP instead business sentiment has taken a beating according to Steve Holmes, senior portfolio manager and research strategist at Queensland Investment Corporation.

“It is very hard to make an investment decision, to hire someone, to build a new factory when you don’t really understand the field you are playing in at the moment,” Steve said.

“The sentiment side could actually end up having a bigger effect on the Chinese economy than what is currently coming through.”

Australia’s Prime Minister Scott Morrison also addressed the event, and Mark did an interview with Bloomberg TV live which you can see here.