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2019 Autumn - Disruptions in agricultural trade

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FPJ1601E - Heath, R (2019), China’s Belt and Road: a game changer for global trade

FPJ1601E - Heath, R (2019), China’s Belt and Road: a game changer for global trade, in Farm Policy Journal, vol. 16, no. 1, Autumn 2019, pp. 18-26, Surry Hills, Australia.

China’s Belt and Road Initiative (BRI) is an enormous program of infrastructure development and trade facilitation. It will have far-reaching consequences for not only Australia’s immediate region but also for a significant proportion of global trade. Australian agriculture is export dependent and the industry goal to grow to $100 billion farmgate output by 2030 will require export growth to be sustained and substantial. Understanding the implications of the BRI should therefore be of critical interest to Australian agricultural businesses, government and anyone with an interest in how the agriculture sector will grow.
Transport infrastructure investments that are part of the BRI will provide a competitive advantage to countries other than Australia through efficient and new trade routes into China, and throughout Central Asia to Eastern Europe. Maritime trade routes will also link China with North Africa and Europe. While the trade routes will represent a threat to some of Australia’s agricultural trade, the investment made in this infrastructure will also stimulate economic growth and development. The associated increase in wealth and change in consumer purchasing habits will provide a massive opportunity for Australia to maintain and expand the agricultural exports that have been driving recent growth in Australian agricultural GVP (gross value of production).
A continued focus on high-value agricultural exports seems warranted, however there are other countries with similar export targets (such as New Zealand and Chile) who have formalised their participation in the BRI. Trade facilitation and smoothing aspects of the BRI, such as the reduction of non-tariff trade barriers, may result in these countries having a competitive advantage over Australia.
The BRI is promoted by the Chinese administration as a streamlined method to deepen commercial relationships with key Chinese enterprises and an access point for Chinese and emerging markets. In this context it is in Australian agricultural interests to be actively engaged with the BRI.

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