Australian exports to China are in decline, new trade data from Beijing suggests
Trade Minister Don Farrell’s bullish predictions clash with stark reality as Australian exports to China suffer double-digit decline for second consecutive year.
Australian exports to China continue to fall despite the improvement in the diplomatic relationship with Beijing under the Albanese government as clear signs emerge that Australia’s giant trade surplus with China is now in structural decline.
New data from China’s customs department indicates Australian exports to China are on track to post a double-digit fall in 2025, as a drop in iron ore sales has far outstripped a surge in exports of beef and other agricultural products.
Despite recent bullish rhetoric from the Albanese government about the future of the trade relationship, Australia’s exports to China fell by 10 per cent in the first 10 months of 2025 compared to the previous year, according to Chinese government statistics.
The fall follows a 9 per cent drop in Australian exports to China in 2024 also dragged down by the declining value of iron ore sales and the collapse of the value of lithium exports.
The new data comes after upbeat comments by Trade Minister Don Farrell about ties with China during a recent trip to Shanghai.
In an interview in early November, Senator Farrell told The Australian that “demand is going to go up” for Australian exporters, citing China’s growth rate of almost 5 per cent a year.
“Now, will it be for iron ore? Or will it be for wine? Or will it be for beef? It will be for something that Australia sells,” he told The Australian in an interview before attending the China International Import Expo where a record number of Australian businesses were exhibiting.
New Chinese customs data covering trade from January to the end of October tells a less sunny story.
China remains by far Australia’s biggest export market, worth more than the next three largest markets combined. However, the decline in the iron ore trade continues to outpace all sources of growth, suggesting 2023 may have been the year that Australia’s total exports to China peaked.
The erosion in the value of Australia’s iron ore trade with China – last year worth almost $100bn, or a fifth of Australia’s exports to the world – follows a slump in the Chinese real estate market.
Another hit to the trade looks certain. This month a giant new iron ore project, Simandou, in Guinea in west Africa began production. Chinese vice premier Liu Guozhong attended a recent inauguration ceremony at the project, a clear sign of its importance to Beijing.
Simandou, a joint venture between multinational miner Rio Tinto and the Chinese state-owned giant Chinalco, in coming years is set to add 120 million tonnes of iron ore a year to world markets, increasing global supply by about 7 per cent. The Chinese government-championed project has been dubbed the “Pilbara killer”.
A consensus of analysts forecast that iron ore prices will drop to between $107 ($US70) and $122 ($US80) per tonne over the next two years, compared to about $150 ($US100) per tonne today.
The federal budget will likely take a significant hit. Australian iron ore miners have been some of the country’s biggest taxpayers, thanks to whooping profits from the China trade.
Some smaller Australian exporters to China in other industries – many of them victims of Beijing’s trade coercion campaign – are doing well and have credited the Albanese government for contributing to an improved business environment.
President Donald Trump’s trade war has helped some. Australian beef exporters have benefited from Chinese trade restrictions on rival American producers and are on track to pass $3bn for the year.
But some agricultural exporters are struggling because of domestic problems in China. Wine giant Treasury Wine Estates last month revealed sales of its Penfolds range had suffered after Beijing further clamped down on drinking and gift giving among the Communist Party’s 100-odd million members.
Lower-priced wine sellers are also finding business more difficult in China’s shrinking wine market. The proof is on the shelves of upmarket supermarkets in Beijing, as The Australian confirmed last week.
More than 18 months after Beijing removed its crippling 200 per cent tariffs on Australian wine, Casella Wines still has not cleared its made-in-Chile Yellow Tail stock that it produced to get around the Chinese impost – a clear sign of the difficulty the wine seller has had clearing stock.
The trade relationship looks better from Beijing’s perspective.
China’s exports to Australia are up 5 per cent in the first 10 months of 2024 compared to the previous year – reducing the size of what has been China’s biggest trade deficit with any country in the world.
Chinese-made solar panels and wind turbines have been big beneficiaries of the federal government’s renewable energy targets. Australian imports of Chinese-made EVs have also surged, encouraged by favourable treatment from Canberra.
The fall of Australia’s exports to China has been greater than China’s gains this year, so two-way trade between Australia and China is on track to fall below $300bn in 2025.
It will be the second year it has fallen. In 2024, two-way trade fell to $312bn from $327bn in 2023.
Despite the ongoing decline, Senator Farrell recently reaffirmed his ambition to grow the trade relationship to $400bn in five years time.
“I’m optimistic that that figure of $400bn is achievable before the end of the decade,” he told The Australian earlier this month.
The latest Chinese trade data shows there has been no let up in Beijing’s export-focused growth strategy despite pressure from the Trump administration and concerns from Brussels about a tsunami of redirected Chinese exports.
Last year, China had a staggering $1.5 trillion trade surplus with the world, the biggest ever recorded.
It is on track to post a fresh record in 2025 as China’s exports to the world grew by five per cent in the year to October, while China’s imports from the world have fallen by 1 per cent over the same period.
The decline in imports by the world’s second biggest economy is a sign of weakness in its consumer market, an increased preference for cheaper local brands and Beijing’s self-sufficiency drive.
A recent poll by UTS’s Australia-China Relations Institute found 66 per cent of Australians think the country is too economically reliant on China, down from 80 per cent in 2021 during the peak of Beijing’s trade coercion campaign.
Although its trade surplus with China is shrinking, Australia remains one of the few rich world countries to not have a deficit with the manufacturing giant.
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