Opportunities for Australia Amid China's Carbon‐Neutral Transition: Input–Output Approach With Analysis of Australian Renewable Potential

ABSTRACT A major transformation in China's energy mix is underway as the country pursues carbon neutrality by 2060, posing significant structural challenges for Australia as a major exporter of carbon‐intensive resources. This study examines the economic impacts of China's decarbonisation on Australia by applying static and dynamic input–output (IO) models using the Environmentally Extended Multi‐Regional Input–Output Database (EXIOBASE). Addressing a gap in the literature on bilateral spillover effects and policy‐responsive modelling, the study introduces a modular dynamic IO framework incorporating competing natural gas and renewable energy stimulus scenarios. The results show that China's decarbonisation negatively affects Australia's resource and mineral export sectors, with substantial inter‐industry propagation effects. While Australia's current gas‐focused policies generate limited economic benefits, with peak output increases of approximately 0.0075, its renewable energy–based stimulus yields significantly higher peak output increases of around 0.02, alongside broader spillover effects. This study contributes by developing a flexible and policy‐adaptive framework for analysing cross‐country energy transitions and their economic effects. The findings highlight the need for Australia to transition away from its carbon‐intensive export structure and accelerate investment in renewable energy industries to sustain long‐term economic resilience and competitiveness amid China's energy transition.