China is telling us what to do and, for once, our complying would be rather helpful. In fact, China is telling us to do what it does.

With its new tariff on Australian beef, which took effect on 20 June, China is telling us to find markets other than itself. This should long have been obvious to us, and for a lot more than just the beef trade. Australian business seems to be paying little attention, however.

China doesn’t mean to be helpful. Its message is inadvertent, a result of it doing what it can to minimise dependence on any other country. China promotes domestic production of anything as far as possible and likes to spread its imports among various suppliers.

According to any economics textbook, the result is suboptimal, because importation almost entirely from a single, most competitive supplier country, could be cheapest. But China recognises that in the real world of strategic competition, some extra cost should be borne to reduce dependency and buy dependability – to buy national security, in fact.

Let’s get back to the new tariff, which is a little piece of China’s policy in action. In December 2025, Beijing said it would impose a quota on imports of Australian beef for 2026. Once the quota had been used up, a 55 percent tariff would apply. The quota has indeed been exhausted, so Australian beef exporters now face a difficult job in selling to China for the rest of the year.

Let’s also get back to China’s inadvertent message: Australia, do with your exports what China does with its imports. Diversify. And you’d better think about doing it with your imports, too.

Those Australian beef exporters now have little choice but to look for new markets. We hope they’ve been looking hard since December. Their solution shouldn’t be to ask the Australian government to make some policy concession to Beijing to restore their access.

Similarly, Australia’s producers of anything else that China can easily buy from other countries, notably various rural products but also some minerals, should be working hard to develop other markets. As for government policy, trade promotion should be focused on just about any market except China.

In this regard, learning from Japan’s experience of responding to China’s economic coercion would be helpful, including considering appointing an economic security minister.

Yes, this economic-security approach may indeed mean accepting a lower export price, just as China is willing to pay higher costs. Again, the policy clashes with the economics textbook. But textbooks are written for level playing fields and fair competition. These hardly exist internationally anymore. China has bought, stolen, subsidised and manipulated the market. And in the real world of strategic competition, some countries use trade as weapons – countries such as China, for example.

We may in fact imagine that China is so keen on avoiding dependence on countries because it knows a thing or two about using trade as a weapon.

Australia should know a thing or two about it, too, after suffering Beijing’s trade wrath for daring to support a Hague ruling against China on the South China Sea in 2016, daring to protect our 5G telecommunications network in 2018 and daring to call for an inquiry into the origins of Covid-19 in 2020. Yet some Australian businesses have not learned the lesson. For them, it seems, the economics textbook, or immediate profit, is still in charge.

The government does understand the problem. Trade Minister Don Farrell said in November 2022, ‘As we have discovered, overreliance on any single trading partner comes with significant risks. That’s why trade diversification is the central plank of the government’s trade policy strategy.’ He’s repeated that line many times since.

But there’s only so much democratic governments can do to influence exporters’ contract decisions.

Alas, Australia still depended on China for 33 percent of its merchandise exports in 2024–25, not much less than the 36 percent seen in 2018–19, the last financial year before the pandemic disrupted trade and China hammered us for speaking out of turn about Covid-19.

The answer, though, remains government involvement, not fatalism. To varying degrees, Australia’s allies and friends have also concluded that resistance is not futile. As Japan adopts its economic security agenda, the US and European nations are spending heavily on industry policy.

These national policies should incorporate collective responses to counter economic coercion and strengthen supply chain resilience. When China starts hammering one of us again economically for some misdemeanour (and sooner or later it will), the democratic world needs to step in.

Governments should also be clearer with those domestic industries that persist in their reliance on China. The industries had better not go crying to the government when the next crisis erupts and their goods are, quite foreseeably, piling up on wharves. They’d better not call for an Australian ‘compromise’ on the crisis or for ‘a more stable relationship’ – or some other euphemistic notion that really means Canberra should back down on some large issue to rescue their bad export strategies.

Instead of merely hoping the next crisis never arrives, they should do what China is telling them to do: diversify.