Australian exports to China surge despite trade struggle – .

Australian exports to China surge despite trade struggle – .

A freight train of BHP Billiton Ltd. carrying iron ore moves along a railroad track towards Port Hedland, Australia.
Ian Waldie | Bloomberg | Getty Images
China bought more goods from Australia this year, although its trade shows no signs of slowing down.
The value of Australian exports to China has jumped 24% from a year ago, to more than A $ 180 billion ($ 135 billion) according to the latest data from August, according to the firm. Oxford Economics studies.

Monthly data shows that goods to China hit a record monthly high of A $ 19.4 billion in July – a 72% increase from a year ago, according to Reuters.

Relations between the two countries deteriorated sharply last year after Australia backed a call for a global investigation into China’s handling of its first Covid-19 outbreak.

Since then, these tensions have turned into Chinese sanctions on Australian products. It ranges from collecting tariffs to imposing other bans and restrictions – affecting Australian products including barley, wine, beef, cotton and coal.

“Australia’s increasingly difficult trade relationship with China has been a major risk to the outlook over the past year,” said Sean Langcake, senior economist at Oxford Economics. “Trade barriers on some products from Australia have been imposed and have steadily intensified as diplomatic tensions mount. “

However, despite this, Australian exports to China “have performed remarkably well,” the company said in an Oct. 22 note.
Australia is one of the few developed countries to enjoy a trade surplus with China, its largest trading partner.

Iron ore drives export growth

Within food exports, however, some products have turned the tide. Meat and live animal products remain “stable” and go to China despite restrictions, Langcake said.

Some of the most affected products include lumber, seafood, beverages, edible oils, charcoal, textiles, shoes, grains and sugar, according to Oxford Economics.

Australian authorities have criticized China for the trade sanctions. In a statement to the World Trade Organization last week, Australia said, “China says these actions reflect legitimate trade concerns, but there is a growing body of information that demonstrates that China’s actions are politically motivated. “

On Tuesday, the WTO announced that it had agreed to set up an expert group to review China’s tariffs on imported Australian wines, according to Reuters.

Despite the sanctions, Australia has managed to divert its banned exports to other countries, according to Oxford Economics.

“The key issue throughout this episode for exporters has been their ability to pivot to other export destinations if they face obstacles when exporting to China,” Langcake said. “It is encouraging that we are finding evidence of a trade dispersion rather than a collapse in export performance. “

One example is coal, which has been in the spotlight as China’s restrictions on Australian coal remain in place, despite the country’s worst energy crisis in years due to a shortage of the raw material.

Australia’s coal exports to India – which faces its own coal shortage – Japan and South Korea have soared, Oxford Economics said.

– CNBC’s Saheli Roy Choudhury contributed to this report.


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