Australia’s Export Exposure to China’s Coronavirus Epidemic

This paper estimates the direct and immediate effects of the coronavirus epidemic on the revenues of Australia’s major export industries. It breaks down Australia’s exports to China across 18 major industry groups, including both goods and services exports. China’s coronavirus epidemic is likely to cost Australia’s export industries between $8 billion and $12 billion in lost revenues, partly due to a slowdown in the Chinese economy but mostly because of Australian educational institutions’ extraordinary dependence on Chinese students. In 2019, Australia exported $157 billion in goods and an estimated $18 billion in services to China (including Hong Kong and Macau), for a total of $175 billion. Commodities exporters are well-prepared for the crisis, but Australia’s services export industries will be hit hard, with two industries at high risk of disruption from coronavirus: tourism (minimum revenue loss: $1.5 billion) and education services (minimum revenue loss: $2.8 billion). The coronavirus epidemic has also highlighted the need for services exporters to keep greater reserves and/or purchase business disruption insurance to insure against low-probability, high-impact events like this year’s coronavirus epidemic.