Australia’s exports to China show signs of passing peak after exports fell 9 per cent in 2024
New data shows China and Australia’s trade slumped in 2024, even as Beijing, the Albanese government and Peter Dutton’s opposition talked up the future of the economic relationship.
Australia’s trade with China slumped in 2024 despite the unwinding of Beijing’s trade restrictions, an improvement in diplomatic relations and boosterish comments from the federal government and opposition, leading some analysts to ask if trade between the two economies has “peaked”.
Statistics released by China’s General Administration of Customs and first published by The Australian reveal Australia’s exports to China fell by 9 per cent last year to $213.7bn, as the price of iron ore weakened and lithium tumbled, more than wiping out gains from Australian agricultural products that Beijing has allowed to return to its market.
Australia’s imports from China were also down, falling by 3 per cent to $107.5bn. That was despite China’s exports to the whole world surging by 7.1 per cent.
Two-way trade was down 7 per cent to $321.5bn, jarring with Beijing’s political messaging that the improved diplomatic relationship would improve trade ties.
The new Chinese data comes before a federal election ahead of which both the Albanese government and Peter Dutton’s opposition have spoken bullishly of their aspirations for the future of the China trade relationship.
Trade Minister Don Farrell has repeatedly said the two way-trade relationship could grow to $400bn a year. Mr Dutton has gone further, saying he would “love to see” the trading relationship increase “two-fold” to $600bn.
On Tuesday, the Opposition Leader was in Perth where he told voters the relationship would be “much stronger” under a Coalition government, citing plans to support the mining industry.
The new Chinese figures underscore how dominant iron ore, along with other resources lithium, coal, LNG and gold, are in Australia’s export mix to China.
Iron ore prices have been dragged down by China’s gloomy property market, a trend that looks set to continue. This week, one of the country’s biggest property developers, Vanke, forecast a $US6.2bn loss and announced the immediate resignation of its CEO for unspecified “health reasons”.
Beijing often cites the “complementarity” of the Australian and Chinese economies as the foundation for relations between two countries, as Lowy Institute senior fellow Richard McGregor observed this week.
But as the output of China’s steel industry continues to slowly decline, Mr McGregor has suggested the two economies may have reached “what we might call ‘peak complementarity’”.
James Laurenceson, director of the Australia-China Relations Institute, noted the 2024 drop in exports was almost entirely due to falling commodity prices. He said the statistics did not include revenue from Chinese international students, which rose by almost 20 per cent in the same period, or tourism arrivals from China, which almost doubled.
“So, if we’ve hit a peak, it’s a high plateau at this stage,” Mr Laurenceson told The Australian.
The 2024 numbers are not the first time that trade has not followed Beijing’s political script.
A surging iron ore price saw Australia set a new record of exports to China in 2021, at the height of the Xi administration’s economic coercion campaign on the Morrison government. That event received a loud silence in China’s media.
The record was just surpassed in 2023, as Australian coal was allowed back into the Chinese economy, and as iron ore and lithium exports were also strong. That record was widely covered by Chinese state-owned media, with Chinese officials and scholars saying it showed the benefits of the improved political relationship.
Even after last year’s fall, China remains by far Australia’s biggest trading partner. China’s two-way trade relationship with Australia is its seventh biggest, behind the US (China’s biggest trading partner), South Korea, Japan, Taiwan, Vietnam and Russia.
Only Taiwan has a trade surplus with China that is bigger than Australia’s. America has by far the biggest trade deficit with China, a longstanding source of angst for President Donald Trump.
A newly released data set by the Lowy Institute finds China’s lead over the US in its trade relations with the rest of the world has widened since the first Trump presidency. Around 70 per cent of economies worldwide now trade more with China than they do with the US, an almost complete reversal of the situation just over 20 years ago, the numbers show.
“It is no secret what’s behind China’s increasingly deep trade relationships: a big jump in exports,” write the report’s authors Roland Rajah and Ahmed Albayrak.
“Increasingly strident actions by the United States and others have still done little to stop China’s export juggernaut. But a much bigger assault is coming,” they write.
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