A conflict between the United States and China over Taiwan would cause an economic shock in Australia leading to widespread loss of jobs and severely disrupted supply of imports needed by industries, a new report says.
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The Australian Strategic Policy Institute said in a paper released today the disruption to trade caused by the hostilities would reach into most corners of the nation's economy, hitting sectors including retail, construction and manufacturing the hardest.
Unemployment would grow in the resources and rural industries, and government budgets and Australia's international trade balance would be forced into deep deficits.
Australian dependence on China as an export market, and as a supplier of imports, had "generated an economic vulnerability should Australia ever confront a blockage to its trade".
"The plausible scenario of a forcible attempt by [China] to incorporate Taiwan that's resisted by the US and its allies could result in such a blockage," the think tank's report said.
It recommended the nation embark on a profound shift in its trade promotion, including by putting more focus on the needs of importers. Australia's government should also assess the vulnerability of industries to supply chain shocks.
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"The Australian government should also work to raise business awareness of the need for diversification of supplies and insurance against supply disruption," the report said.
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