Economic and Emission Impact of Australia–China Trade Disruption: Implication for Regional Economic Integration

Xunpeng Shi, Tsun Se Cheong and Michael Zhou
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Michael Zhou: Australia–China Relations Institute, University of Technology Sydney, Australia

No DP-2021-20, Working Papers from Economic Research Institute for ASEAN and East Asia (ERIA)

Abstract: This study examines the debates on supply chain resilience and the economic and emissions impact of supply chain rerouting using Australia and China trade as an example. The estimations demonstrate that, in both export and import cases, a trade embargo between Australia and China, despite being compensated by alternative supply chains, will cause gross domestic product loss and emissions increases for both countries. Moreover, even if all other countries gain from the markets left by China, many of them suffer from overall gross domestic product loss and emissions increase. The findings that ASEAN and China may also suffer from an Australia–China trade embargo, despite a gain in trade volume, suggests that no country should add fuel to the fire. The results suggest that countries need to defend rules-based trading regimes and continuously promote regional economic integration.

Keywords: COVID-19; supply chain; global value chain; economic integration; Australia; China (search for similar items in EconPapers)
JEL-codes: F18 Q56 (search for similar items in EconPapers)
Date: 2021-07-07
New Economics Papers: this item is included in nep-cna, nep-cwa, nep-ene, nep-env, nep-int, nep-isf and nep-sea
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