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Trade

Australia's soaring exports to China at risk in diplomatic rift

Trade to suffer unless Canberra eases criticism: Communist Party-backed paper

An iron ore mine in Western Australia. The country exports the bulk of its iron ore to China.   © Reuters

SYDNEY -- Australia's exports to China have climbed to new highs even as diplomatic disputes between the countries escalate, but Beijing has begun to step up pressure on Canberra for a more accommodating stance in international relations.

Chinese-bound shipments reached an all-time high of 14.6 billion Australian dollars ($10.5 billion) in June, data released Tuesday by the Australian Bureau of Statistics shows. China received 49% of goods exported by Australia in the month.

Yet the Global Times, run with the support of China's Communist Party, published an article the same day essentially warning that Australia should rethink its confrontational diplomatic and security policies toward Beijing if it wants to maintain such exports to the world's second-largest economy.

"Though trade remains strong so far, the damage deteriorating relations are having on Australia's economy will show in the long term if Canberra does not correct its path," said the article, which was based on an interview with a national security scholar.

Australia's exports to China rose 12% to AU$151 billion for the year ended in June. This growth was fueled by iron ore, which makes up an estimated 60% of the total.

Australia's total iron ore exports reached AU$102.1 billion in the 12-month period. China accounted for 87%, a preliminary report in July indicates.

Chinese iron ore demand was hurt by the country's coronavirus outbreak, which sank Australia-produced ore to the $80-per-ton price range in early February. But as demand recovered in China and output fell across the globe, prices began rebounding by June and now hover around $110 to $115 per ton.

Tensions between China and Australia have risen since April, when Prime Minister Scott Morrison's call for an independent inquiry into the origins of the coronavirus irked Beijing. China retaliated the following month with import restrictions on certain Australian meat and an 80% tariff on barley.

In late July, Canberra rejected Beijing's South China Sea territorial claims in a statement sent to the United Nations. Australia also expressed "serious concerns" over China's assertiveness in those waters in a joint statement with the U.S. soon afterward.

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