I'm not over worried about this. While China is by far the biggest trade partner of us Australians. Australia actually has a low proportion of trade as a percentage of GDP and the products being blocked by China are all fungible (perhaps wine being the least fungible). At worst this will cause harm to some sectors for a few years, or drive down the the Australian Dollar or Australian commodities and give China's competitors an advantage. I can't see it having a large impact on Australia being more pliable to Chinese demands or the Australian economy as a whole. I don't think it will even serve the purpose of disuading other countries from taking actions Chinese finds provocative. They are alienating so many countries at the same time, including; Sweden, Czech republic, India, Japan, South Korea, United States, Philippines, Vietnam, Malaysia, Indonesia and Canada at once.
I think the discussion of trade here misses two points.
First, it can be argued that Australia started this trade war. Long before China put any restrictions on imports from Australia, we were putting "anti-dumping" tariffs on Chinese steel. The ban on Huawei is a bit dodgy. You wouldn't want every mobile router in Australia to come from the same Chinese vendor. But the choice we actually have is between N networks with western hardware, or N+1 networks where the extra one uses Chinese hardware (and is possibly a lot cheaper and a bit shonkier than the others). It's not clear how that extra network would cause the collapse of Australian democracy: no one is forcing us to use it. On the other hand, it's very clear how it might cause a collapse in the profit margin of a monopolistic telecom company with close ties to the Liberal Party.
Secondly, there's that thing which everyone knows but pretends not to: trade benefits consumers much more than producers. For farmers in Australia, this means plowing some crops into the ground and delaying buying their kids the latest smart phone. For farmers in China, it means feeding their kids a diet of mercury, cadmium and melamine, when they lose access to safe and unadulterated produce. That isn't a very smart way for the Chinese government to spend its political capital, and you have to suspect this is more about vanity than deliberate strategy.
> trade benefits consumers much more than producers
In the short term. Long term, if you don't protect them while your trading partner does, it means your key industries will become foreign-owned, or simply bankrupt. After that, the idea of sovereignty, when you own none of your economy, is laughable.
The problem with that argument is that industries are consumers too. If anything is going to send Australian firms bankrupt, it's forcing them to pay exorbitant prices for steel and network routers that their competitors can buy cheaply.
Fun fact: these days, Australians own more of everyone else's farms and factories than they own of ours.
