Coronavirus: China trade surges, despite the odds

China’s demand for Australian goods has surged during the pandemic, with exports pushing over $74bn in the first six months of the year.

Trade Minister Simon Birmingham. Picture: AAP

China’s demand for Australian goods has surged during the pandemic, with exports pushing over $74bn in the first six months of the year, despite ongoing tensions with Beijing over foreign interfer­ence and calls for an independent inquiry into the origins of COVID-19.

Trade data obtained by The Australian supports Scott Morrison’s declaration that trade with China “has never been stronger”, with the communist nation increasing ­its purchase of Australian goods by more than $2.6bn, or 3.7 per cent, in the first six months of 2020 compared with the same period last year.

While exports to countries includin­g Japan, India, Malay­sia and Hong Kong dropped significantly, trade to the US jumped by almost 38 per cent, driven by a spike in gold exports.

On China, the Prime Minister said “the facts on the ground are they’re buying more than they ever have”, describing the econo­mic relationship between the ­nations as “mutually beneficial”.

The Department of Foreign Affairs and Trade data showed increas­es in export goods, including beef, wheat, vegetables, fruits, refined petroleum and animal feed to China, compared with the same period in 2019.

Trade figures released by the Australian Bureau of Statistics on Tuesday showed iron ore exports driving a trade surplus of $8.2bn in June, providing a cushion for the COVID-19 induced collapse in GDP. Total exports rose by 3 per cent to $36.2bn, while imports rose by 1 per cent to less than $28bn.

Trade Minister Simon Birm­ing­ham said Australia had recorded a financial-year trade surplus of $77.4bn in 2019-20, a record result, despite “ongoing domestic and international challenges”. Despite trade with China holding up during the pandemic, overall exports of Australian goods in the first half of the year fell by $7bn on last year as COVID-19 border and social restriction­s put pressure on servic­es, tourism and education.

“Australian exporters across a range of sectors, like resources, agriculture and advanced manufacturing, continue to withstand global economic shocks and remai­n highly sought-after in our key markets,” Senator Birmingham said.

“Notwithstanding factors such as rising export costs and disruptions to supply chains, our exporters continue to show incredible resilience and ability to navigate through these significant global economic headwinds.”

In a statement released after the Reserve Bank board meeting on Tuesday, RBA governor Philip Lowe said while infection rates had declined in some countries, “they are still very high and rising in others”.

 

“International trade remains weak, although there has been a strong recovery in industrial activity­ in China over recent months,” Dr Lowe said.

NAB economist Tapas Strick­land said the continued strength of iron ore exports had been ­“supported by China’s aggressive stimulus” measures, and sales to China accounted for nearly half of exported goods in June.

International sales of Australian resources were up 1 per cent to $23.8bn in June, with a $941m spike in metal ores and minerals to $11.8bn. Coal exports fell 12 per cent, or $456m, to $3.4bn.

AMP Capital chief economist Shane Oliver said despite net export­s contributing about one percentage point to national economic growth in the June quarter, he still expected GDP to contract in the order of 7-8 per cent between­ April and June.

Westpac senior economist And­rew Hanlan said Australia’s trade surplus was buoyed by the net services position, which swung from a small deficit of -$0.1bn, to the largest services surplus on record­, at $2.5bn in June.

International border closures sent services imports crashing 56 per cent from December, a difference­ of $4.9bn.

Services export­s fell by 26 per cent, or $2.3bn.