China trade rises to $208bn despite feud

Two-way goods trade between our two countries has forged higher to hit $208.8bn over the 11 months to November, despite the increasingly fractious relationship.

Australia’s export performance through the pandemic has been strong thanks to China’s powerful demand for our commodities. Picture: Bloomberg

Two-way goods trade between Australia and China has forged higher to hit $208.8bn over the 11 months to November — which is higher than the same period in 2019, despite the increasingly fractious relationship.

Chinese authorities threatened and imposed a variety of restrictions on Australian imports in 2020, including on meat, wine, seafood and timber. With little evidence that Beijing is backing down in its escalating and one-sided trade war, Australia in mid-December referred our most important economic partner to the World Trade Organisation over its barley tariffs.

Yet the latest trade data from the Australian Bureau of Statistics for November, released on Thursday, shows that while the political ties have grown seriously strained, the trade links between our two nations have grown stronger.

Surging iron ore exports this year on strong demand and soaring prices explains the continued resilience in our international sales to China, but less discussed has been a significant rise in Australian purchases of Chinese made products, especially items such as household and home office goods as Australians spent significantly more time at home during the pandemic.

The total value of goods imported from China reached a record $8.8bn in November, to be up by 11 per cent against October and versus the same month a year before. The data is not seasonally ­adjusted, but Chinese imports dipped on a monthly basis in each of the previous two Novembers. Chinese imports over the year to date climbed to $76.3bn — an increase of 5 per cent versus the same period in 2019.

Australian exports to China were weaker, dropping by nearly 10 per cent in November to $11.4bn, despite increasing strongly in the previous two Novembers.

Year-to-date, sales reached $132.5bn, down nearly 2 per cent versus the $135bn in exports to China over the same period in 2019. That brought two-way trade over the 11 months to November to $208.8bn, up marginally on the $207.7bn recorded in the prior corresponding period.

More broadly, the ABS trade figures show that, adjusting for seasonal factors, total exports lifted by 3 per cent for the month to $36.4bn — which JP Morgan economists described as “a solid outcome given ongoing trade frictions with China”.

Coal exports, including both thermal and metallurgical, fell by 4 per cent in November, with coal sales now 44 per cent below the 2019 average, Mr Kennedy said.

The value of iron ore shipments dropped by 2 per cent in the month, but this was offset by a solid 8 per cent gain in LNG sales.

With international services trade largely somnolent thanks to closed borders, a 10 per cent jump in imports in the month to a record $31.4bn explained the narrowing November trade balance to $5bn from $6.5bn in October.

Total consumption goods imports increased 4 per cent in line with the lift in spending.