It's hard to write a coherent strategy on the fly, or in a few paragraphs.
However....I don't see 'trade decoupling' as useful, but identification of some things a country ought to have handy is useful, if it wants to avoid the possibility of direct pressure in future.
Of course, it's hard to decide the list of what you really need in such a complex modern world, and harder to set it up - you can't just summon these things out of nowhere. Ongoing fuel security efforts are a good example of the dilemma.
A secure domestic supply of things like the chemicals used for water purification seems sensible, but there are practical considerations.
Presumably, that would require someone building a chemical plant.
After you make your list of 'essentials' then you hit policy considerations, because governments of either stripe require that domestic manufacture of anything needs to be a commercial proposition.
Even during wartime, supplies can move between friendly countries, but it isn't just Australia finding some domestic capability gaps exposed in this covid19 crisis, so the essential things you need have to still be available elsewhere.
To be fair, the wholesale transfer of Western manufacturing to China for decades has not previously given rise to problems of the sort being widely contemplated now because supply has been hitherto reliable - and plenty of Western firms undertake major manufacturing in China.
Some 'shortages' have also arisen from China's prioritising its own needs, and diversion by 'friends' for that matter, not politically-driven witholding by China.
Wrinkles in trade and political relationships have been ironed out in the past, but China is changing.
The sheer size and scale of China industry these days isn't fully appreciated, it's like talking about pictures from the hubble telescope. 'Oh that cloud is 800,000,000 light years across'...it's hard to really grasp.
To run with that metaphor, China is almost like a small planet, growing in power and growing also in the will and ability to exercise it.
Any major and emerging power has hiccups in how it manages relationships, but China is unusually large-scale and its representatives are not like Russians in the 70's, with half a dozen readily-identifiable agents in a coat and fur hat working out of their embassy and being followed around by equally identifiable Aussie security people.
It is the coherence in effort the CCP can exercise over their behemoth which emenates a kind of 'Borg' vibe, if that impression isn't just partly a subconscious racist feeling on my part from living in a country which has a history including enactment of racist policies, and in my youth, a casual racism expressed in schools and pubs and workplaces.
We feared the 'yellow peril', and the other 'dominoes' of Asia relentlessly falling toward Australia if Vietnam became communist.
On the conscious level, it isn't about Chinese as a race, or even about the 'Chairman for life', but about the communist system and the ruling CCP, which considers itself the ruling party for eternity.
Our relationship with a 'one-party forever' communist State of China's great and growing power and scale needs to be considered and treated differently from our relationships with free and democratic countries.
Of course, China's own needs for imports are great and its internal condition complex, irrespective of the fact the CCP runs it. It is possible, even probable that the CCP will eventually cede or have power taken from it, but not in my lifetime.
'Trade decoupling', is not what Australia needs or wants.
We don't need to try to 'punish' China, for imposing trade restrictions, or even for publicly announcing that we are racists and we are something to be scraped off its shoe.
We just need to run our own race and let them run theirs - sell China what it wants, buy from China what we want and have our government act maturely in securing National security in its various aspects, maybe looking a bit wider and deeper than in the past.
Looking for more trade with other democracies seems sensible, because frankly, we are theoretically not in favour of one-party, communist dictatorships, but recognising that nobody else seeks from us the mountains of iron ore and coal that China seeks.
Government supporting local manufacturing is tricky - we are hemmed-in by WTO Rules, designed to prevent government subsidy of anything, not to mention by capitalism, which also relentlessly wants all manufacture to migrate to its cheapest source, like water seeking its own level.
