The benefits of Australia’s trade with China

As China and Australia’s diplomatic relations turn 40 this year, a report reveals how the countries have been united through trade. In the last financial year, the two nations traded $13,470 per Australian household.

The research, commissioned by the Australia China Business Council, says the relationship continues to benefit both countries. While it emphasised Australia’s reliance on telecommunications and clothing from China, its exports ($70 billion) are worth more than its imports ($43 billion).

“Australia is relatively unique among industrialised nations as a net exporter of commodities and a net importer of manufactured goods,” the report said. “We have valuable commodities (and increasingly, manufactured goods and services) that China needs to fuel its massive industrialisation and urbanisation.”

While natural reserves such as iron ore are Australia’s most lucrative export, it is also shifting a lot of agricultural products – in particular wool – and beer.

Free trade agreement?

Despite increased cooperation, talks of a free trade agreement are not moving quickly, with the Australian government refusing to give a deadline. But such an agreement wouldn’t guarantee access to some of China’s largest industries, which are state-owned.

“Even if we can get something signed on a piece of paper, the reality is that Australian companies won’t get great access to the Chinese political economy,” China expert Associate Professor John Lee from Sydney University told ABC News, Australia.

“If you actually look at how the Chinese economy works, the government has essentially reserved around a dozen sectors of the economy for national champions and state-owned enterprises to compete in and thrive. And they will block out foreign companies and domestic private companies. They do this for political reasons in order to try to bulk-up the state-owned sector.”