Australia’s exports to China are jumping despite their trade fight
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BHP Billiton Ltd.’s freight train transporting iron ore along the rail tracks towards Port Hedland in Australia.
Ian Waldie | Bloomberg | Getty Images
Despite the fact that their trade war is not abating, China continues to buy more Australian goods this year.
According to Oxford Economics, the value of Australia’s Chinese exports has increased 24% compared to a year earlier, reaching over $180 billion Australian Dollars ($135 billion).
Monthly data shows goods to China hit a record monthly high of 19.4 billion Australian dollars in July – a surge of 72% as compared with a year ago, according to Reuters.
The relationship between Australia and the United States deteriorated dramatically last year, after Australia supported an appeal for peace. global inquiry into China’s handling of its initial Covid-19 outbreak
Since then, these tensions have led to Chinese sanctions against Australian goods. That has ranged from levying tariffs to imposing other bans and restrictions — affecting Australian goods including barley, wine, beef, cotton and coal.
Oxford Economics principal economist Sean Langcake stated that “Australia’s growing fractious trade relationship with China is a major downside risk to our outlook over the last year.” As diplomatic tensions increase, trade barriers have been placed on some products coming from Australia.
However, Australia’s China-bound exports have “performed remarkably well” through all this, the company stated in an Oct. 22, 22 note.
Australia, China’s largest trading partner and one of its few industrialized countries has a surplus trade balance.
Export growth driven by iron ore
However, there are some exceptions to the general trend within food exports. Langcake stated that meat and other live animals are continuing to be “steady”, and continue to go to China in spite of restrictions.
Oxford Economics reports that timber, seafood, drinks, edible oils and coal are among the hardest hit goods.
Officials from Australia have condemned China’s trade sanctions. In a statement to the World Trade Organization last weekAustralia stated: China claims that the actions are legitimately motivated by trade concerns. But, there’s growing evidence that China’s actions were driven by political considerations.
WTO confirmed Tuesday it will establish a panel. examine China’s duties on imported Australian wineAccording to Reuters, it is.
According to Oxford Economics, Australia managed to divert banned exports from other countries despite the sanctions.
Langcake said that the key question for exporters was how they can pivot to other destinations when faced with China’s trade barriers. We find encouraging evidence of trade dispersion, not a collapse in export performance.
A prime example of this is coal. China’s restrictions on Australian coalThey will remain the same, in spite of changes within the country. worst power crisisA shortage of this commodity has caused it to be out of production for many years.
Australia is a major exporter of coal. India – which is facing its own coal shortage — Japan and South Korea have soared, said Oxford Economics.
— CNBC’s Saheli Roy Choudhury contributed to this report.
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