Lyla Lindsey
China is Australia's largest trading partner, with 39% of all goods exported in 2019-20 going to China, while 27% of all goods imported were from China. The two countries have a complementary economic relationship, with trade growing from $113 million in 1973 to $78.2 billion in 2009. Major imports from China include clothing, communications equipment, computers, prams, toys, games, and sporting goods. However, in recent years, there has been a decline in preference for Chinese-made goods among Australians, with only 21% saying they would be more likely to buy a product made in China. This shift in preference may impact the trading relationship between the two countries and influence where Australian goods are manufactured in the future.
| Characteristics | Values |
|---|---|
| Percentage of Australians who prefer buying goods made in China | 21% |
| Percentage of Australians who prefer buying goods made in Australia | 93% |
| Percentage of Australians who would be less likely to buy a product that is 'Made in China' | 58% |
| Percentage point decrease in preference for Chinese-made goods from 2019 to 2020 | 9% |
| Percentage point increase in preference for Australian-made goods from 2019 to 2020 | 6% |
| Percentage of all goods exported from Australia to China in 2019-20 | 39% |
| Percentage of all goods imported by Australia from China in 2019-20 | 27% |
| Value of goods exported from Australia to China in 2019-20 | $150 billion |
| Value of goods imported by Australia from China in 2019-20 | $81 billion |
| Value of goods exported from Australia to China in 2014-15 | $75 billion |
| Value of goods imported by Australia from China in 2014-15 | $57 billion |
| Australia's largest export to China | Iron ore |
| Australia's second-largest export to China | Coal |
| Major imports from China to Australia | Clothing, communications equipment, computers, prams, toys, games, sporting goods, furniture, televisions |
| Australian exports to China in 2020 | $169 billion |
| Australian imports from China in 2020 | $89.5 billion |
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What You'll Learn
Australians are less likely to buy Chinese-made goods
In 2020, 93% of Australians expressed a higher likelihood of buying Australian-made goods, a significant increase from 87% in the previous year. However, only 21% of Australians stated they would be more inclined to purchase products made in China, representing a 9% drop from 2019. The deterioration in relations between the two countries, exacerbated by Australia's request for an investigation into the origins of COVID-19, has likely contributed to this shift in consumer behaviour.
The decline in preference for Chinese-made goods is evident in several industries. Clothes, electrical goods, mobile phones, footwear, and sporting goods experienced the most significant decreases in demand during the pandemic years of 2020-2021. For instance, the preference for Chinese-made mobile phones dropped by 6% during this period, while support for Australian-made electrical goods was almost double that of their Chinese counterparts.
Despite Australia's strong trading relationship with China, Australians have become slightly less inclined to purchase Chinese-made goods over the years. In 2018, 34% of Australians indicated a likelihood of buying such products, compared to 35% in 2014. This trend extends to other consumer goods imported from China, including telecommunications equipment, office machinery, and personal protective equipment, which saw substantial import growth in 2020.
While Australia's largest export to China, iron ore, remains unaffected by any restrictions, the Chinese government imposed tariffs and import restrictions on various Australian goods, including wine, barley, lobsters, coal, timber, and red meat, in response to the COVID-19 investigation requests. These actions may have further influenced Australian consumers' preferences and contributed to the decline in support for Chinese-made goods.
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China is Australia's biggest trading partner
The China-Australia Free Trade Agreement (ChAFTA), which came into force in December 2015, has resulted in significant increases in exports of other products, including meat (especially beef), medicinal and pharmaceutical products, and beverages (particularly red wine). Since the agreement, imports have also grown significantly, with large increases observed in telecommunications equipment, office and ADP machines, and personal protective equipment.
The sheer size of the China-Australia trading relationship means that any economic or political changes in China can significantly impact Australia. For example, China's zero-Covid policy and severe lockdowns in key hubs have resulted in slower growth, which will likely affect Australia's exports to the country. Additionally, the trade war between the US and China has resulted in steep tariffs on Chinese-made goods, impacting Australian brands that manufacture in China and ship directly to US consumers.
Despite these challenges, China remains Australia's largest export market, and the demand for Australian raw materials and products continues to contribute significantly to the Australian economy.
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US tariffs impact Australian brands manufacturing in China
Australian brands that manufacture their products in China are facing significant challenges due to the US tariffs imposed by the Trump administration. The tariffs, which have been described as a "trade war" between the US and China, have resulted in increased costs and complexities for Australian businesses selling their goods in the US market.
One of the main issues for Australian brands is the removal of the "de minimis exemption," which previously allowed parcels valued under $800 to enter the US duty-free. This change, also known as the "'Shein and Temu tax', will impact Australian companies that ship directly from China to American online shoppers. As a result, these brands will now have to navigate soaring tariffs, with some facing rates above the 10% "baseline."
The impact of these tariffs is being felt across various industries, from toy brands to fashion labels. For example, Melbourne-based entrepreneur Beatrice Toh, who launched the children's company HeyDoodle, is now facing challenges as she navigates the escalating trade tensions between the US and China. Similarly, Australian swimwear brands like Sea Level and Bond Eye are struggling to absorb the additional costs imposed by the tariffs.
In response to these challenges, some Australian companies are considering their options, including exploring alternative manufacturing locations or diversifying their production across multiple regions. However, moving production to another country can be difficult, especially for those with long-standing relationships with Chinese factories. Additionally, producing more in Australia may also be challenging due to the decimation of certain industries, such as the garment industry.
The Australian government has declined to work directly with China to counter the US tariffs. Instead, they have stated their intention to diversify trade and reduce reliance on China, their largest trading partner. This decision could further complicate the strategies of Australian brands that are already navigating the complexities of the US tariffs.
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Australian exports to China
China is Australia's biggest trading partner for both the export and import of goods. In 2019-20, 39% of all goods exported by Australia went to China, while the total value of goods exported doubled in the five years to 2019-20, from $75 billion in 2014-15 to $150 billion in 2019-20.
The overall value and growth in goods exported to China in recent years have been driven by exports of resource commodities, particularly metalliferous ores (mostly iron ore), and coal. In 2019-20, exports of iron ore accounted for 56% of all Australian goods exported to China and were a significant driver of the increase in exports between 2014-15 and 2019-20. Since the China-Australia Free Trade Agreement (ChAFTA) came into force in December 2015, there have been significant increases in exports of other products, including meat (especially beef), medicinal and pharmaceutical products, and beverages (particularly red wine).
However, Australian-made products have experienced a surge in support during and following the COVID-19 pandemic, with 93% of Australians saying they are more likely to buy a product made in Australia in 2020, up from 87% a year earlier. Conversely, Chinese-made goods have fallen out of favour, with only 21% of Australians saying they would be more likely to buy a product made in China in 2020, a 9% drop from the previous year.
Despite this, Australia's exports to China hit $219 billion in 2023, and China's imports of Australian commodities have been supported by substantial state-directed investments into high-tech manufacturing capabilities. However, China's economic growth has slowed, and weak consumer confidence and retail sales pose challenges for Australian services exports.
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Australian imports from China
China is Australia's biggest trading partner for both the export and import of goods. In 2019-20, 39% of all Australian goods exported went to China, while 27% of all goods imported were from China.
In the three years from 2019-20 to 2022-23, China's annual sales of manufactured goods (excluding refined petroleum) to Australia rose 39% to $106 billion. During this period, Australia's imports of Chinese motor vehicles soared from $415 million to $6.2 billion, while purchases of electric machinery increased by 88% to $3.1 billion. Imports of steel structures, including wind towers, also rose by 71% to $2.3 billion. There has been a massive growth in imports of Chinese trucks, semi-trailers, forklifts, civil engineering equipment, and electricity transformers. Imports of personal protective equipment also increased substantially in April 2020, likely due to the COVID-19 pandemic.
Australia has also seen a significant increase in imports of Chinese telecommunications equipment, office machines, and ADP machines, driven by the demand for home office equipment as more people worked and studied from home.
Despite Australia's strong import relationship with China, there has been a shift in consumer preferences towards Australian-made goods. In 2020, 93% of Australians said they were more likely to buy products made in Australia, while only 21% expressed a preference for Chinese-made goods. This shift may be attributed to the COVID-19 pandemic and its impact on international borders and travel restrictions.
It is worth noting that some Australian businesses manufacturing in China have faced challenges due to steep tariffs imposed by the United States on Chinese-made goods. These tariffs have impacted Australian brands selling products manufactured in China to American consumers.
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Frequently asked questions
No, but China is Australia's largest source of imports. In 2019-20, 27% of all goods imported to Australia were from China.
Major imports from China include clothing, communications equipment, computers, prams, toys, games, sporting goods, furniture, and televisions.
Some Australian companies that manufacture in China include HeyDoodle, Sea Level, and Bond Eye.
Yes, the pandemic has contributed to a surge in support for Australian-made goods and a decline in preference for Chinese-made goods. In 2020, 93% of Australians said they would be more likely to buy Australian-made products, while only 21% said the same for Chinese-made goods.
Several factors influence the trade relationship, including tariffs, trade agreements, and exchange rates. For example, the China-Australia Free Trade Agreement (ChAFTA) has contributed to significant growth in trade between the two countries. Additionally, the Australian dollar's value can impact the cost of Australian exports.
