Link to Article- https://www.reuters.com/article/us-australia-china-trade/australia-says-china-trade-disruptions-deeply-troubling-idUSKBN27M08G
Relations between China and Australia had already been deteriorating, but to add to the troubles, Australia now reports that China has informed their buyers not to purchase some Australian goods. Although Chinese officials deny that they are blocking any Australian imports, this reporting differs. A source in China claims that the Chinese are “suggesting” not to accept imports from Australia, but it is not yet an official order. The root of the rough relationship between the two is because of an inquiry that Australia was apart of against China for an investigation into the source of COVID-19.
The relationship between China and Australia is deteriorating; though this won’t be a huge loss for China, Australia is extremely dependant upon China for their economy. If Australia loses this trade partner, they will need to search for a new main trade partner to fill the immense hole that China would leave. This loss will plunge Australia even further into the recession their economy has been facing for almost 2 months now. It was originally projected that they would be able to come out of this downturn once they got a hold of their COVID-19 cases, but this loss could keep them in this recession for even longer.
This change in the relationship between Australia and China is a great example of a common goods problem. It is Australia’s interest to keep their economic relationship with China, but it is also in their interest to investigate the origins of COVID-19 for future prevention. The repercussions made by China are an instance of the principle of reciprocity to solve the common goods problem; more specifically, the disadvantages of reciprocity. To the Chinese, Australia is acting in a way of self-interest by supporting the inquiry against China and now they are punishing them by blocking their exports to the country. This act is a direct representation of the downward spiral that can come from reciprocity.