research / Journal publications

This paper quantifies the effects of shocks in bilateral political relations on Australia’s merchandise goods exports to China between 2001 and 2020. Using a vector autoregression framework, our estimates suggest that short-term fluctuations in political relations have no long-run effects on Australia’s aggregate export growth to China over this period, nor in any of three sub-periods analysed. A disaggregated analysis of 19 HS2 sectors reveals heterogenous short-run effects across sectors and time periods, with numerous sectors indicating the seemingly perverse finding that an increase in political cooperation/conflict is associated with a decrease/increase in export growth, with a lag of one to four months. We propose two hypotheses that are consistent with these findings, ‘doubling down’ and ‘dropping the ball’, contributing new understanding to the political relations-trade nexus in the context of a bilateral relationship that will likely be characterised by both cooperation and conflict in the decades ahead.

Read the paper online here.

Note: This paper was published in the China Economic Journal, DOI: 10.1080/17538963.2022.2117180

Authors: Jane Golley, Professor, Crawford School of Public Policy, Australian National University; Vishesh Agarwal, Economist, The World Bank; James Laurenceson, Director, Australia-China Relations Institute, University of Technology Sydney; and Tunye Qiu, Student, Crawford School of Public Policy, Australian National University.