Australia’s growth may ‘never return’ to its pre-virus path after trade trouble with China, says economist

Australia’s growth may ‘never return’ to its pre-virus path after trade trouble with China, says economist

The national flags of Australia and China are displayed before a portrait of Mao Zedong facing Tiananmen Square.Frederic J. Brown | AFP via Getty ImagesAustralia's economy has been badly hit by escalating trade tensions with China — and it's possible growth might "never return" to its pre-virus levels even when the pandemic is over, according to research firm Capital Economics.China is by far Australia's largest trading partner, accounting for 39.4% of goods exports and 17.6% of services exports between 2019 and 2020, the firm said.But Beijing has for months been targeting a growing list of imported products from Down Under — putting tariffs on wine and barley, and suspending beef imports.Gross domestic product (GDP) in Australia could contract even more if Beijing continues to pile tariffs on more Australian imports, said its senior economist Marcel Thieliant in a note last week.Goods and services that are already "in the firing line" are worth almost a quarter of Australia's exports to China — forming 1.8% of its economic output, the research firm said.But it may not end there."That figure could rise to around 2.8% of GDP if China targeted other products for which it isn't hugely dependent on Australian imports," Thieliant said.While