Australia’s Growing Dependence on China Sparks Concern Over Economic Leverage

Australia’s increasing economic dependence on China has been described as “embarrassing” by Michael Shoebridge, Director of Strategic Analysis, Australia, who warns that Beijing’s economic strategy poses long-term risks to national sovereignty and policy independence.

Speaking on the broader implications of China’s global trade practices, Shoebride, who has a government intelligence background, accused Beijing of deliberately weaponising its economy, particularly through its control of critical resources such as rare earth elements. “China is not just trading; it’s using its economic power as a strategic tool,” he said. “It is hitting the rest of the world over the head on rare earth access, aiming to create dependencies that it can later exploit.”

Rare earth elements—used in defense technology, electronics, and renewable energy—are a key example of China’s dominance in global supply chains. By limiting access or imposing export controls, China has previously demonstrated its willingness to use trade as a form of diplomatic leverage, most notably in disputes with Japan in 2010 and, more recently, with Lithuania and Australia. Shoebridge voiced concern that despite these risks, the Australian government appears to be moving closer to China economically, without sufficient safeguards. “The Prime Minister is effectively signing Australia up to be subject to this kind of economic coercion,” he warned.

Australia-China relations have thawed somewhat since their diplomatic low point in 2020, when Beijing imposed trade restrictions on Australian exports, including wine, barley, and coal. While several of those sanctions have since been lifted, critics argue that resuming business as usual with China ignores the underlying strategic risks.

Australia remains heavily reliant on China as its largest trading partner, accounting for over 25% of its total two-way trade. Australia’s trade with China reached A$312 billion in 2024‑25, and China accounted for around 26% of two‑way trade. This dependence is particularly pronounced in the export of iron ore, critical minerals, and agricultural products.

Strategic analysts and former defense officials have increasingly called for Australia to diversify its trade relationships, invest in domestic critical minerals processing, and strengthen economic resilience against potential coercive tactics from authoritarian states.

As geopolitical tensions escalate in the Indo-Pacific, Shoebridge’s warning reflects growing unease over how economic interdependence can be manipulated, especially by states with fundamentally different political and strategic objectives.