Business Issues: China-Australia Trade, Investment, and Tariffs Report

This report provides a comprehensive analysis of the business issues impacting trade and investment between China and Australia. It begins with an introduction to the concept of business issues, followed by a summary of an article discussing the decline in Chinese investment in Australia due to diplomatic conflicts, tariff barriers, and the COVID-19 pandemic. The report then analyzes these issues using theories of free trade barriers and global foreign investment, exploring their implications for firms, industries, and consumers. The analysis covers both positive impacts such as increased national wealth and productivity, and negative impacts like environmental damage and limited product variety. The report concludes by summarizing the key findings, highlighting the complex interplay of factors shaping the economic relationship between China and Australia.

Business issues article
analysis
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Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1: Summary of the article:....................................................................................................3
TASK 2: Analysis of the article using two key theories which are relevant to the issues:.............4
TASK 3: Implications of issues discussed for firms, industry and consumers:...............................5
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7
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INTRODUCTION
The term business issues refers to some form of obstacles or hurdles while conducting a
specific business either at domestic level or at international level. This occurs within two or more
business firms or even between countries that do not later agree to maintain any kind of business
relations with each other (Benz and Jaax, 2020). There are several reasons for which there is an
emergence of issue such as uncertainty at internal level, mass shift in demographics, political
instability, or could be anything that does not allow having smooth conduct of business. The
present report comprises of a discussion on business issues between Australia and China due to
tariff barriers, international investment along with its certain implication of such issue upon
firms, industry as well as consumers.
TASK 1: Summary of the article:
The mentioned article discusses about an issue related to conduct of business between two
different countries that is Australia and China where the amount of investment has experienced a
sudden fall with approximately 61 per cent in the year 2020 which seems to be the lowest in past
6 years. The main reason behind this loss of investment or business is raising conflicts related to
diplomacy between these two nations. A Chinese investment university named “The Australian
national University’s Chinese Investment in Australia” better known as CHIIA has a recorded
database for about amount of investment that is $780 million in a year. it is analysed that there
were twenty investments from China made in year 2020 which is below the year of 2016
experiencing peak at that time. In the year 2019, the amount of investment made by China in
businesses of Australia is only $1.57 billion which was dropped by approximately 47 per cent.
A director of an economic research bureau named “East Asian Bureau of Economic
Research” Dr Shiro Armstrong from CHIIA quoted that the pace of declining investments by
China in Australia is much faster than last year for international foreign investment. He further
quoted that according to the news of united Nation there is a fall in foreign direct investment
which is better known as FDI has experienced 42 per cent fall. This degradation in investment is
higher although it is being analysed in different manner. No doubt companies form China has
made their investment in almost every sector of Australia but the previous year has seen a huge
fall that only lead to investment in the sectors of real estate which was amounted to $354 million,
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manufacturing sector touches $119 million amount whereas the mining sector received
investment worth $321 million.
The another reason for such fall is the happening of pandemic that is Covid-19 where the
governments has declared some temporary actions in the month of March that requires a scrutiny
from “Australian Foreign Investment review board” also known as FIRB. Earlier in case of
transactions having non sensitive nature were only reviewed if they amounted to $930 million or
$213 million for those investors who belong to countries having agreement of free trade with
Australia. The main aim behind this step was to safeguard a sale some assets of Australia to
international owners but saw a delay from FIRM having a backlog for the evaluation period of
approximately 1 month to 6 months. In order to add some country security the government of
Australia has declared some more reforms for having foreign investments in the month of July
and permitted the treasurers to discontinue the respective deals (BBC news, 2021).
The month of August has restricted the sale of Lion Diary which is a subsidiary of kirin’s
Japanese beverages along with certain drinks from Mengniu Diary from China. Later the
countries came into a trade tension in against of such increased diplomatic backdrop. In such
response the country China has later implemented certain trade restrictions or tariff barriers upon
the goods that are being imported from Australia like wine, lobster, barley or beef. The trade
tariff upon wine was imposed to higher than 200 per cent in some situations. The impact of such
tension has been seen upon coal where the charges were unable to empty the cargos at the cost of
China. Such kind of happening has knocked the door of attention for Australia as the country
China seems to be its largest investor.
TASK 2: Analysis of the article using two key theories which are relevant to
the issues:
The present article is related to a business issues between two countries that is China and
Australia due to the presence of several reasons which has impacted upon the investments. The
issues are mentioned below:
Free trade Barrier or tariff barriers:
The concept of free trade barrier or tariff barrier refers to imposition of high amount of
taxes upon import of certain goods or services form one country to another. This is done in order
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to have less competition through acquiring items from different nation and support domestic
businesses (Choi, Furceri and Yoon, 2020). Restrictions on free trade bring execution of some
rules or regulations that makes a business or trade much tough to conduct. In this situation the
country which is acquiring the goods or services charges much higher than the real value so that
neither the exporter country can sell nor the businesses of importing nation can buy due to its
high charges.
In relation to the present article China has imposed trade barriers on some of the imports
such as beef, barley, lobster or wine whereas some items such as wine has charged with 200 per
cent more than its original value so to have less imports. These restrictions upon trade have made
a negative impact on the business of coal.
Global Foreign Investment:
This comprises of some investments that are being made by one country in other or by
businesses that takes an active participation in the management of such investments or getting
some stake in equity of the company to encourage the strategies of firms (Milner, 2021). This
takes businesses to have globalisation and make their investments in different countries. It
involves setting up of production plant, joint venture or partnership business that requires huge
amount of investment such as capital, technology, human resource and others. u
Due to the happening of pandemic Covid-19 or diplomatic conflicts between China and
Australia there was a decrease in global investments from the end of China for approximately or
more than 61 per cent in the year 2020 where just 20 investments were made by China who is
known as the largest investor of Australia.
TASK 3: Implications of issues discussed for firms, industry and consumers:
The international business issues between China and Australia has both negative as well as
positive impact upon the firms, industry as well as consumers which are described below:
Positive impacts of issues:
The several positive impact of international trade issues being discussed above (in the
article) are mentioned below:
 Enhancement of national wealth through circular flow of money within the nation.
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 Increasing productivity of domestic businesses with an achievement of economies of
scale due to large amount of production (Nwoke, 2020).
 Generation of opportunities such as employment with a reason of high demand of
products or services in industry.
 Availability of goods or services at cheaper rate to consumers due to non-imposition
of import taxes (Paquin, 2021).
Negative impacts of issues:
The several negative impact of international trade issues being discussed above (in the
article) are mentioned below:
 Use of lower quality of business resources which are available within the country.
 Huge exploitation of employees within industry in order to meet the demands of
customers (Spilker, Nguyen and Bernauer, 2020).
 High damage to the environment due to excessive use of natural resources in
manufacturing or distribution process.
 Less availability of foreign exchange amount due to restrictions on foreign trade.
 Less variety or out-dated products or services for consumers (Sykes, 2020).
CONCLUSION
From the above report it can be concluded that the countries sometimes due to several issues
faces trade issues that hampers the economy and brings a negative environment at global level.
The issues such as international ownership, trade restrictions, pandemic, global foreign
investments are some which gives birth to business issues. The differences occur due to conflicts
brings various negative impacts upon firms, consumers as well as on industry along with certain
positive implications upon same.
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REFERENCES
Books and Journals
Benz, S. and Jaax, A., 2020. The costs of regulatory barriers to trade in services: New estimates
of ad valorem tariff equivalents.
Choi, S., Furceri, D. and Yoon, C., 2020. Policy uncertainty and foreign direct
investment. Review of International Economics.
Milner, H.V., 2021. Resisting protectionism: Global industries and the politics of international
trade. Princeton University Press.
Nwoke, U., 2020. Imposition of trade tariffs by the USA on China: implications for the WTO
and international trade law. Journal of International Trade Law and Policy.
Paquin, S., 2021. Trade paradiplomacy and the politics of international economic law: the
inclusion of Quebec and the exclusion of Wallonia in the CETA negotiations. New
political economy, pp.1-13.
Spilker, G., Nguyen, Q. and Bernauer, T., 2020. Trading Arguments: Opinion Updating in the
Context of International Trade Agreements. International Studies Quarterly. 64(4).
pp.929-938.
Sykes, A.O., 2020. Short Supply Conditions and the Law of International Trade: Economic
Lessons from the Pandemic. American Journal of International Law. 114(4). pp.647-
656.
Zhou and et. al., 2021. The Economic Policy Uncertainty and the Choice of Entry Mode of
Outward Foreign Direct Investment: Cross-border M&A or Greenfield
Investment. Journal of Asian Economics, p.101306.
Online
Chinese investments in Australia, BBC news, 2021. [Online] Available through
https://www.bbc.com/news/amp/business-56234776
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