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Bloomberg Australia: Standing up to China

Bloomberg Australia
Bloomberg

Welcome to our weekly newsletter — a fresh, global perspective on the stories that matter for Australian business and politics. This week: How wolf-warrior diplomacy is backfiring, Australia's economic recovery and new hope for our barley exporters.

When Xi Jinping visited London in 2015, the trip was a roaring success. Fish and chips with then-Prime Minister David Cameron; a prestigious address to a joint sitting of Parliament; Chinese media swooning over the Duchess of Cambridge's choice of a "Chinese red" dress to a state banquet.

Fast-forward five years and it's a very different picture. U.K. criticism of Hong Kong's national security law and China's treatment of Uighur Muslims, coupled with a ban on Huawei from its 5G network, have soured ties just as Britain needs to negotiate a trade accord.

Sound familiar? The headline on my colleague Ros Mathieson's piece for Businessweek —  The End of a Wonderful Friendship and the Beginning of Trade Woes — could equally have been written about Australia's own fraught relations with China.

After another week of intense "wolf-warrior" diplomacy, there are signs that China's aggressive strategy of using trade to stifle criticism is wearing thin and risks backfiring as President-elect Joe Biden looks to unite U.S. allies.

It wasn't just Scott Morrison who found the now infamous Afghan tweet from a Chinese Foreign Ministry official "repugnant." Across the ditch, Jacinda Ardern said New Zealand diplomats had directly registered concern with Chinese authorities. A group of lawmakers from a range of countries released a video urging people to drink Australian wine — hit by sky-high tariffs — as a sign of solidarity against China's bullying.

While Australia may serve as a stark warning to other countries about the perils of standing up to China, at least we know we're not alone.

Bouncing Back

For signs that Australia is bouncing back from the pandemic, look no further than Qantas.

In an upbeat statement this week, the Flying Kangaroo said it sees domestic capacity rising to 68% of pre-pandemic levels this month and almost 80% in the first three months of next year. That's due to pent up travel demand being released as the states lift border restrictions.

Still, there will likely be almost no international flights until at least July 2021, and global travel will take years to recover.

More broadly, the economy has returned to growth, technically ending the recession, with the biggest quarterly expansion in GDP since 1976. How's that for a V-shaped recovery?

Beer Craze

With China targeting a string of Australian commodities, exporters are seeking out other markets to soak up demand.

For barley growers at least, look no further than India. The nation has a growing cohort of beer drinkers and with its population expanding by 15 million per year, the industry will need to make an additional 2 million hectoliters — enough to fill 80 Olympic swimming pools — by 2024, Bloomberg Intelligence predicts.

Photographer: Dhiraj Singh/Bloomberg

Photographer: Dhiraj Singh/Bloomberg

"As the younger generation grows older, there's a drastic shift from hard liquor to beer and wine," said Nakul Bhonsle, owner of Great State Aleworks, a microbrewery based in Pune, in India's west. "So that shift will help us." —Edward Johnson

What We're Reading 

A few things from around the world that caught our attention:

 

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