Australia-China trade: Big challenges and opportunities

Anthony Albanese and business leaders will be focusing on the main economic component of his China trip in Shanghai on Monday – the trading relationship. At a meeting of Australian iron ore miners and Chinese steelmakers, the Prime Minister will emphasise the reliability of Australia’s iron ore suppliers and our nation’s leading role in steel decarbonisation and green iron technologies. He will be joined by participants such as BHP president Geraldine Slattery, Fortescue chairman Andrew Forrest, Hancock Iron Ore CEO Gerhard Veldsman and Rio Tinto CEO Kellie Parker. The discussion will centre on decarbonisation and the need for investment in new technologies, which will be vital to both nations’ economies and the world environment.

Australian miners supply almost 60 per cent of China’s iron ore imports, and Chinese steel production accounts for more than 50 per cent of global supply. While government has an important role to play, it will be industry – including partnerships between Australian and Chinese interests – that will drive the major developments to decarbonise the sector, Mr Albanese will emphasise. At a lunch for 200 Australian and Chinese business leaders at the Fairmont Peace Hotel, Mr Albanese will celebrate the wider trading relationship, including the part that Australian produce – beef, cherries and “the best wine in the world” – played in Chinese New Year celebrations welcoming the Year of the Snake. Restoring top-level diplomatic exchanges with China and the end of trading bans imposed by China in response to the Morrison government calling for an inquiry into the origins of Covid-19 is one of Labor’s often-cited success stories.

Despite the bullish narrative, however, the trading relationship continues to demand hard work. In the first five months of the year, Australia’s resources exports are 16 per cent below where they were in 2023, falling from $83.2bn for the period to $69.6bn, according to analysis by The Australian of DFAT trade statistics. The biggest fall was in lithium exports (an essential mineral), which have plunged by more than 80 per cent from the first five months of 2023. The value of iron ore exports, affected by China’s property turmoil, has also fallen. Now, as always, diversification of markets remains crucial to our national prosperity.