This video is made possible by Shopify—the
platform behind Wendover and thousands of others’ e-commerce businesses. Among the many former British colonies that
have grown into some of the world’s most developed countries, Australia is unique. Specifically, its economy has developed into
something unlike that of any other, and a big player in the story of that economy is
China… for better or worse. To understand China’s role in Australia
and the problem this poses down under, one has to start in a very different place—the
United States. If it were not for the US, Australia might
not exist. Prior to the American Revolutionary War, Britain
would primarily send their prisoners to the American colonies when sentenced to transportation. Once the colonies became the independent country
of the United States, Britain needed to find a new place to put their convicts and for
that, they chose what is now Sydney. The first fleet of convicts who arrived in
Botany Bay were the origins of what is now the country of Australia, and they might not
have made the long trek to there if not for the founding of the United States. Beyond just this, the history of Australia
and the history of the US are eerily similar and interlinked. The two country’s foundings are offset from
each other by 180 years, but parallel significantly. Australia is almost the exact same size as
the contiguous United States, and even has similar dimensions to the US. Both nations include similarly diverse landscapes
and climates, and both started in the east. They then each expanded west, taking over
indigenous land, largely fueled by the discovery of gold and its subsequent mining. While the scale is obviously quite different,
both nations were quite isolated by distance to the European world, although close to a
number of other European colonies. Both nations started with their small British
populations but then grew primarily through immigration from English-speaking countries,
secondly through immigration from non English-speaking European countries, and thirdly through immigration
from the rest of the world. They even share the same story in the founding
of their capital cities—they each built a planned city in a central location between
their two major population centers as to not favor one over the other. The similarities go on and on, but the point
is that Australia and the US were largely dealt the same cards, but got vastly different
results The US quickly developed into one of the most
politically, economically, and socially powerfully countries on earth with a population well
over 300 million. Australia, however, never grew into more than
a small, regional power, with a small population of just 25 million. Now, Australia is no doubt a highly successful
nation. It’s among the world’s most wealthy countries,
the world’s most developed countries, it has one of the world’s lowest unemployment
rates, one of the world’s lowest poverty rates, and is one of the highest scoring in
the world happiness index. What the country is definitively not, though,
is a superpower. While you can never forget the role of pure
chance, given the similar starting position of both countries, the first thing one has
to look at for a reason behind this is Australia’s geography. Despite their similar sizes, what differentiates
Australia from the US is its desolation. About 35% of the landmass is considered desert,
which generally cannot sustain large population centers. There are of course exceptions to this, most
notably in the Middle East where huge cities such as Dubai, Doha, and Riyadh sprung up
in the middle of deserts, but each of these largely developed as a result of oil booms
in their respective countries. While the deserts of Australia do have oil
deposits, none of these are at a similar scale to those of the Middle East, have not been
significantly exploited, and, in addition, it’s largely Perth, on the western coast,
that has emerged as a hub for oil, rather than an inland city. With limited arable land and a harsh climate,
the inland of Australia just isn’t conducive to most human life. That results in a fairly striking population
density map. Just five major population centers have emerged—Brisbane,
Sydney, Melbourne, Adelaide, and Perth. Each of these is directly on the coast. The largest city in Australia that’s not
directly on the coast, in fact, is Canberra—the capital—which has a population of just 400,000
and was a planned city, meaning its development cannot be a perfect indicator for the viability
of inland life in Australia. Even then, it sits a mere 70 miles or 115
kilometers from the coast. If you’re talking about population centers
that are significantly offset from the coast, in the outback, as it’s called, the largest
would probably be Alice Springs—a northern territory town of just 24,000. This desolation can be further exemplified
by the country’s road network. The primary highway linking the population
centers of Brisbane, Sydney, Melbourne, and Adelaide to Perth is just a single, two-lane
road, traversing the southern coast of the country. The same is the case for the Stuart highway
which serves as the primary link from the south coast to the north coast up the center
of the country—it too is just a two-lane road. What this all means is that much of Australia’s
land just doesn’t lend itself to the development of large-scale human settlements, leaving
it fairly empty. Australia’s vastness served a crucial role
in developing it into one of the world’s wealthiest economies, though. The country is now the world’s largest exporter
of minerals. It has huge amounts of coal, iron, lead, diamonds,
gold, uranium, and more, mostly in its vast, open, outback. That means that the primary economic activity
in Australia’s interior is mining, and with natural resources making up a majority of
the country’s exports, it were these minerals that played a major part in growing Australia
into a wealthy economy. They also cemented who Australia’s economic
partners would be. Nearly 30% of Australia’s exports go to
China, primarily driven by China’s significant demand for minerals. China, in fact, in the number one spot, buys
more from Australia than the number two, three, and four countries combined—Japan, the US,
and South Korea. Beyond just Chinese companies buying minerals
from Australian mining companies to use in their factories, there are also sizable amounts
of investment coming in from Chinese companies. Overall, it’s safe to say that the Australian
mining sector would not be what it is without China, but Australia also relies on the billion
people up north to act as customers for another crucial aspect of their economy—education. As strange as it might sound, universities,
which in most cases are non-profits, form a sizable part of the Australian economy as
Australian universities are some of the most successful in the world at attracting international
students. The country is home to about 875,000
international students across all types of schools. Now, of course, remember, the entire population
of Australia is only about 25 million. What that means is that, in the entire country,
1 out of every 28 people are international students. Of these international students, the highest
proportion, by far, are Chinese, at 30%. That represents a quarter of a million Chinese
students studying in Australia. On the flip side, that means that at any given
time, 1 out of every 5,000 Chinese people are studying in Australia. Within universities, Chinese make up 10% of
the average student body, however, considering they tend to cluster together, certain universities
have far higher proportions. At UNSW the proportion is 23%, at the University
of Sydney, it’s 24%, and numbers are similar at other hotspots. All in all, these Chinese students contribute
more than about $10 billion a year to the Australian economy. There are also plenty of other sectors that
play a part of China’s huge economic influence in Australia such as tourism, manufacturing,
services, and more. Given how much the two economies are interlinked,
therefore, as China has risen, so too has Australia. This link to the success of one of the biggest
economic success stories ever has helped Australia earn an impressive record. It has gone 28 years, since 1991, without
a recession. While the rest of world struggled through
the Asian Financial crisis, the collapse of the dot-com bubble, and the Great Recession,
Australia just kept on going with quarter after quarter after quarter of economic growth. By most measures, in modern history, no developed
country has ever gone such a long period without a recession. But this all, of course, has a flip side. Such heavy economic reliance on a country
that politically, Australia doesn’t always agree with is dangerous. An Australian-Chinese trade war would certainly
cause a lot more damage down under than up north. At the same time, there are quite a few efforts
by China to influence Australia. China has made plenty of attempts to tip politics
in the country in their favor. As one, small example, Chinese Communist Party
run or affiliated WeChat accounts, a popular social network in China, released posts critical
and mocking of Australian politician and current prime minister Scott Morrison in the run-up
to the May, 2019 Australian election. Beyond that, the Chinese government has been
known to unofficially sponsor certain pro-China, ethnically-Chinese candidates for various
Australian offices through a variety of methods. In media, China has been known to impart vast
control over Chinese-language outlets in Australia and responds harshly to criticism through
defamation lawsuits and more. On university campuses, the Chinese Communist
Party is known to have vast amounts of influence, with accusations that the government has built
spy networks within Australian universities to monitor Chinese students and their political
views. In one instance, a Chinese student studying
in Brisbane participated in a rally supporting the anti-Beijing protests in Hong Kong, and
days later, the student's family back in China were visited by the authorities. There is a very clear but unspoken threat
by China to Australia—if you make things difficult for us politically, we’ll make
things difficult for you economically. How things typically work in China is that,
in order to achieve business success, even when running a fully private company, one
needs to be cosy with the Chinese Communist Party that runs the government. Therefore, even if a Chinese company is fully
private, it knows that it needs to act in a way that aligns with China’s politics. Of course, while some of China’s tools of
economic warfare are more traditional, like tariffs, a lot of its influence stems from
the actions of the private sector. Any private Chinese company knows that, if
Australia suddenly took a hard pro Hong Kong independence stance, for example, the CCP
might not be happy about continued business with the country. Australia’s therefore in a tricky spot where
it’s a western country socially and politically, but in many ways, an eastern country economically. As a result, taking a political stance against
any actions by China comes at a much higher cost than that of a less economically linked
country. Australia quite literally cannot afford to
lose China. A trade-war with China on the scale of the
US’ would devastate the Australian economy. China no doubt has done wonders for Australia,
but the point is that too much reliance on any economy, no matter how strong that economy
may be, is a risky strategy. When that strong economy is run by a foreign
government that can adjust its flows in an instant, that’s even riskier. According to one study run by the Reserve
Bank of Australia, if China’s GDP contracted by just 5%, that would result in Australia’s
GDP falling by 2.5%. That is a clear-cut case of economic reliance,
so, if Australia wants to keep up its unprecedented period of economic growth irregardless of
how China’s doing, diversification is crucial. I know a lot of Wendover Productions viewers
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I agree with the conclusion of this video, we need to diversify our economy! That's why we should be investing in renewables, high speed broadband for the digital era, a trust fund for our amazing mineral wealth to be funded back into public projects, and so on. I can't wait for our level-headed government to adopt these reasonable policies :)
Australia = Big Hong Kong
How good is outside economic reliance?
Start learning Mandarin. When China invade the US will pretend ANZUS doesn't exist.
Economic-f******-diversity.
It's not just good economic management but it also prevents foreign dependencies like this. If you can describe yourself as a "mining town" or a "farming town" or a "public service town" that's not a mark of pride. That's a problem. When the industry goes pear shaped for whatever reason, and no matter what industry you're talking about it will go pear shaped at some point, the entire town suffers. When the coal mine in a coal mining town closes down or even just slows down for whatever reason (or a farming town whenever there's a drought), the entire region is suddenly in big trouble. It might not be the only game in town, it might not even be the largest company in town but if a single industry - particularly an export industry vulnerable to foreign forces outside the local's control - contributes a significant portion of the town's economy when that slows down or stops for any reason or no reason in particular, that's bad. Scale that up to a goddamn continent and that's our current economic situation.
Australia has gotten very rich off what is objectively a very silly strategy. Economic diversity is the name of the game. When one industry booms you take the money from that, through taxes or other methods, and invest it into other local industries. For example, our high salaries mean our mines are highly automated. We're world leaders in automation in that regard. Sure would be nice if we had an incentive to take that technology and apply it to, for example, manufacturing - a couple grants for automation in that field would achieve that. Alternatively, we have lots of coal and lots of iron ore. Might be a good idea to give an incentive to companies to take those components and make steel instead of shipping them off individually - a simple tax on exported unprocessed ore would achieve that.
Our export economy is very reliant on on a very select set of industries and there's very little in the works to diversity that. There's some noise about increasing export of rare earth metals and lithium ore, but that's not so much diversification as it is increasing the amount of raw ore we ship offshore to be refined somewhere else, and every state wants to export hydrogen but that's about it. Unrefined ore, education and small hydrogen deals with Korea and Japan does not for a diverse export economy make.
I"m just happy he pronounced Melbourne and Canberra unlike any other normal American like Melborn and Can-berra.
Is it true that China mocked Morrison? Seems counter-intuitive since they kinda support the Libs and their conservative stuff.
Hey it's Wendover! I wonder how many references to airplanes he can sneak into this one :)
Came here to post this. Really cool video. I knew education was a large export for us but wasn’t aware just how large. This may be a great way not only to boost the economy but also influence Chinese ideologies? Shame the government cut education spending.
One of the craziest things about the coalition is that they've managed to convince everyday Australians that a budget surplus is everything while ignoring the biggest risk to the Australian economy: diversification.
We have a country that digs holes for China, builds overpriced apartments for China to buy, and trains Chinese citizens. That's. It.
Incredibly risky structure but they just keep banging on about how a surplus will save us.