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  • Writer's pictureShaun Brien

The Problem With Boycotting China This Christmas

Australia has historically been one of the only nations ever to hold a trade surplus with China. China's rapid industrialization, cheap labour and mass production has led to enormous demand for Australia's natural resources such as iron ore, beef and barley which has created significant employment, prosperity and growth amongst the Australian population.

The recent trade issues which have occurred between Australia and China has led to a number of suggestions being made by the general public about how we should move forward with this trade relationship. One of the loudest voices to be heard is that we should all 'boycott Chinese products this Christmas'. In theory this idea is incredibly simple, a push away from Chinese imports (as we know almost everything is 'Made In China') should create more demand for domestic goods and services therefore helping to provide/maintain employment levels within Australia and then increase incomes and living standards.

The problem with this boycott however, is relatively simple. To boycott China could have widespread implications to negatively impact prices, employment and living standards within Australia.

Firstly, a boycott of Chinese products means that the many Australian producers who use Chinese imports as inputs in their production will need to seek alternatives elsewhere which are likely to be more expensive to attain. This cost is then likely to be passed on to consumers through higher prices which will lessen our disposable and discretionary incomes and harm our living standards. Alternatively, boycotting trade with China completely could mean that many mining and agricultural jobs would be lost due to China being our larger buyer of our exports on average.

Secondly, a boycott of Chinese products lessens the amount of competition faced by local producers. If local producers no longer need to remain internationally competitive via lowering production costs and increase efficiency to maximise sales and profits, this could lead to local producers becoming complacent. This means that by a lack of productivity Australia's growth in production could become stagnant.

Finally, low income households rely on cheap imports such as those from China to maximise their utility (satisfaction) when spending their income. This Christmas especially, after such a complicated year in regards to incomes and employment, low income households really might not have a choice but to buy the cheapest alternative possible to maximise both their families material and non-material living standards through the festive season.

In the end, my personal opinion is that this 'trade war' has no real winners, but both sides are letting their ego and pride lead to their decision making. The politicians aren't the ones who are then negatively impacted. We are.

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