Leslie Massey
China is Australia's largest trading partner, with total trade in goods and services valued at A$85.1 billion in 2009. This figure has grown significantly in recent years, with the value of goods exported doubling in the five years from 2014-15 to 2019-20, and imports also growing by 42% over the same period. China accounts for 39% of all goods exported from Australia and 27% of all goods imported into the country. While China has been imposing punitive barriers against Australian exports, its sales to Australia have been rising rapidly, with a 39% growth in manufactured imports from China since 2019-20. This has led to an increase in imports of Chinese-made goods across a wide range of sectors, including motor vehicles, electric machinery, steel structures, clothing, and toys. However, it is worth noting that there has been a recent shift in preference among Australians towards domestically produced goods, with 93% of Australians expressing a preference for Australian-made products in 2020.
| Characteristics | Values |
|---|---|
| China's share of Australia's manufactured imports | 33% |
| Australia's imports from China that have risen since 2019-20 | Motor vehicles, electric machinery, steel structures, trucks, semi-trailers, forklifts, civil engineering equipment, electricity transformers, white goods, clothing, sporting goods, light fittings, electronic circuits, shipping containers, furniture, mattresses, toys, solar panels, cable and insulating materials |
| Australia's exports to China that have risen since 2014-15 | Meat (especially beef), medicinal and pharmaceutical products, beverages (especially red wine), coal, wool, canola, live animals, fish, edible products, wine, and meat |
| Australia's imports from other suppliers since 2019-20 | Up 33.7% to $7.8 billion |
| Australia's imports from China since 2019-20 | Up 4.7% to $9.9 billion |
| Australia's total trade with China in 2009 | Valued at A$85.1 billion |
| Australia's exports to China in 2009 | Valued at A$42.4 billion |
| Australia's imports from China in 2009 | Valued at A$35.8 billion |
| Australia's investment in China at the end of 2008 | $6.9 billion |
| Chinese investment in Australia by May 2010 | Total investment of around A$60 billion |
| Australians who said they would buy Australian-made goods in 2020 | 93% |
| Australians who said they would buy Chinese-made goods in 2020 | 21% |
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What You'll Learn
China is Australia's biggest trading partner
In addition to being a significant export market for Australian goods, China is also Australia's largest source of imports. Chinese exports to Australia include a diverse range of manufactured goods, such as clothing, communications equipment, computers, toys, games, and sporting goods, furniture, and automobiles. Between 2019 and 2020, China's annual sales of manufactured goods (excluding refined petroleum) to Australia rose by 39% to $106 billion. This growth was driven by increasing imports of motor vehicles, electric machinery, wind towers, steel structures, civil engineering equipment, and consumer goods.
The strong economic complementarity between the two countries has resulted in a substantial trade relationship that has grown significantly since its modest beginnings in the 1970s. Two-way merchandise trade has expanded from A$113 million in 1973 to A$78.2 billion in 2009. The implementation of the China-Australia Free Trade Agreement (ChAFTA) in 2015 further bolstered trade ties, leading to significant increases in exports and imports between the two countries.
However, the Australia-China trading relationship has faced challenges due to economic difficulties in China, which have led to a focus on self-sufficiency and reduced dependence on Australian raw materials. Despite these challenges, the sheer size of the China-Australia trading relationship makes it difficult for Australia to quickly replace this partnership in the near term.
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Imports from China have been rising
Australia and China have a strong trade and investment relationship that has grown significantly since the 1970s. China is Australia's largest trading partner, and the biggest source of imports. In 2009, China accounted for 27% of all goods imported by Australia. By 2019-2020, this had risen to 33% of all manufactured imports, excluding refined petroleum.
The overall value of goods exported from China to Australia has been increasing. Between 2014-15 and 2019-20, the value of exports doubled from $75 billion to $150 billion, with imports growing by 42% over the same period. This growth continued, with China's sales of manufactured goods to Australia increasing by 39% to $106 billion in the three years from 2019-2020 to 2022-23.
China's sales across a wide variety of sectors to Australia have been rising. Imports of Chinese trucks, for example, have increased rapidly, from $140 million to $930 million in the three years from 2019-2022. Imports of civil engineering equipment have also been growing fast, rising from $600 million to $1.5 billion during the period when China was imposing bans on Australian exports. Imports of wind-tower and solar panel equipment, and other electricity grid machinery and components, have also been increasing.
Imports of Chinese white goods, clothing, and sporting goods have been rising at a rate of 10% or more per year. Sales of semi-trailers and containers have more than doubled since 2019-2020 to $1.8 billion. There has also been significant growth in imports of Chinese motor vehicles, up from $415 million to $6.2 billion since 2019-2020. Purchases of electric machinery are up 88% to $3.1 billion.
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Australian exports to China have grown
Australia and China have a strong trade and investment relationship, which has grown substantially since its modest beginnings in the 1970s. In 2009, China became Australia's largest trading partner, with total trade valued at A$85.1 billion. This represented an increase of 15.1% from the previous year.
China is Australia's largest source of imports, with 39% of all goods imported into Australia coming from China in 2019-20. China's sales of manufactured goods to Australia have been rising rapidly, with a 39% growth in the three years from 2019-20 to 2022-23. This includes significant increases in the sale of motor vehicles, electric machinery, wind towers, trucks, semi-trailers, civil engineering equipment, and electricity transformers. China also provides a large proportion of Australia's imports of white goods, clothing, sporting goods, and telecommunications equipment.
Australia's exports to China have also grown significantly in recent years, doubling in the five years from 2014-15 to 2019-20. This growth has been driven by exports of resource commodities, particularly iron ore and coal. In 2019-20, iron ore alone accounted for 56% of all Australian goods exported to China. There have also been increases in exports of other products, including meat, medicinal and pharmaceutical products, and beverages such as wine.
The Australia-China trade relationship is expected to continue growing, particularly in the resources sector. Australia has also been working to diversify its exports to China through a 'sector by sector and province by province' trade initiative, targeting sectors with a natural trade fit, such as autos, clean energy, and other strategic opportunities.
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Australians prefer Australian-made goods
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. However, this does not mean that Australians prefer goods made in China. In fact, the preference for Australian-made goods has remained strong over the years. In 2022, 96% of Australians said they were more likely to buy products made in Australia, compared to products made in any other country. This preference for Australian-made goods was already evident in 2014-15, when 88.1% of shoppers said they were more likely to buy locally made food products, up from 84.8% in 2012-13. Similar increases were seen in other sectors, with more shoppers saying they were likely to buy locally made clothes, electrical goods, sporting goods, and wine.
The preference for Australian-made goods is not limited to Australians; in 2022, 60% of Australians said they were more likely to buy goods made in their nearest neighbour, New Zealand, than in any other foreign country. This may be due to the strong relationship between the two countries, as well as the perception of high-quality products from New Zealand.
The high preference for Australian-made goods may be due to a variety of factors, including a sense of patriotism, a belief in supporting local businesses, and a perception of higher quality. Additionally, the COVID-19 pandemic may have played a role, with Australians wanting to support local businesses that were affected by the pandemic. Furthermore, the trading relationship between China and Australia has deteriorated in recent years, with the Chinese government imposing tariffs and import restrictions on Australian goods. This may have influenced Australians' preferences away from Chinese-made goods.
Despite the strong preference for Australian-made goods, it is important to note that Australia's appetite for manufactured goods has been satisfied by imports. In recent years, there has been a significant growth in trade between Australia and China, with the value of goods exported doubling in the five years to 2019-20. This growth is reflected in various sectors, including motor vehicles, electric machinery, wind towers, and civil engineering equipment. However, it is worth mentioning that Australia has been taking steps to diversify its trading partners and reduce its reliance on any single country, including China.
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Trade tensions impact Australian businesses
Trade tensions between the US and China have impacted Australian businesses in several ways. Firstly, increased costs due to rising tariffs and transportation expenses have made it more challenging for Australian businesses to turn a profit. Trade tensions have also fostered uncertainty, making businesses more hesitant to invest and plan for the future. Additionally, even when Australia is not directly involved in a trade dispute, retaliatory tariffs imposed by other countries can still hurt Australian businesses by disrupting global trade flows and affecting how trade is conducted worldwide.
Australian exporters have faced challenges due to President Trump's stance on tariffs, which he views as a way to boost American manufacturing and protect jobs. The threat of tariffs has been used as a negotiating tactic, potentially influencing Australia to invest more in defence. During periods of heightened trade tensions or when China actively reduces its reliance on certain imports, iron ore and coal prices tend to decrease, directly impacting the revenue of Australian mining companies and potentially leading to reduced profits, scaled-back production, or job losses.
Trade tensions have also encouraged Australian businesses to diversify their markets and focus on selling higher-quality, more specialized products to remain competitive. Australia has been a member of the Quadrilateral Security Dialogue, which aims to counter China's influence in the Asia-Pacific region. This membership, along with other geopolitical factors, has contributed to rising tensions with China. China's import restrictions on Australian goods, such as coal, wine, and barley, have had significant economic impacts, although surging fossil fuel prices and a weaker Australian dollar have helped the overall resources sector remain resilient.
The US-China trade war has had both direct and indirect effects on Australia. It has influenced the demand for Australian exports to both countries and disrupted global trade flows, impacting Australia's trade relationships with other nations. Changes in Chinese demand, influenced by global trade tensions and China's economic policies, have had a direct impact on commodity prices and, consequently, on the revenue of Australian mining companies.
Despite these challenges, there have been some opportunities for Australian businesses. During periods of trade tensions, China has occasionally diversified its sourcing, creating opportunities for Australian miners. Additionally, Southeast Asian countries, the UK, and other regions have increased their imports of Australian agricultural goods, helping to offset some of the losses from the Chinese market.
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Frequently asked questions
China is Australia's largest source of imports, with China's total merchandise exports to Australia valued at A$35.8 billion in 2009. China accounts for 27% of all goods imported by Australia. However, it is not accurate to say that most goods in Australia are made in China.
Major imports from China to Australia include clothing, communications equipment, computers, prams, toys, games and sporting goods, furniture, and televisions.
The Australia-China trade relationship has grown significantly since its modest beginnings in the 1970s. Two-way merchandise trade increased from A$113 million in 1973 to A$78.2 billion in 2009. In 2019-20, China accounted for 39% of all goods exported by Australia and 27% of all goods imported by Australia.
