Australia – China Trade Factsheet
Australia and China currently enjoy a strong economic and trade relationship. This relationship will grow further as China continues to open up its economy to world markets, and Australia positions itself to take advantage of this expansion.
Why China Matters…
- Population 1.3 billion
- 7th largest economy in the world (GDP of US$1649 billion)
- Average growth of over 8 per cent over the past decade, with growth of 9.5 per cent in 2004, and expected growth at above 8 per cent for 2005, and around 8 per cent for 2006
- World’s 5th largest trader
- China’s share of world merchandise trade has risen from 2 per cent in 1988 to 6 per cent in 2004
- ABARE forecasts China’s share of world trade will rise to a massive 16 per cent by 2015
- Chinese economic reforms are driving urbanisation and diversification of industry, leading to a greater role for markets and prices
- 200 million people have been lifted out of poverty in the past 2 decades in China, as a result of economic reforms
China and Australia’s Growing Trade Relationship
Australia is China’s 11th largest merchandise import source, with Australia traditionally exporting primary commodities and agricultural products to China, but with rapid growth in manufactures. Services exports have also seen rapid growth.
- Australia’s exports to China grew 21 per cent to A$12 billion in 2004
- China is Australia’s 3rd largest export market
- China is Australia’s 2nd largest import source
Agriculture
Australia’s agricultural exports to China totalled $A2.5 billion in 2004. China is now the third largest agricultural export destination for Australia. Wool is by far the largest agricultural product exported to China, valued at $A1.2 billion. Rapid change in Chinese lifestyles means that consumption levels are in many cases exceeding their levels of production.
Top 5 Agriculture Exports to China
| Agriculture Exports | CY2004 |
| A$m | |
| Total Agriculture Exports | 2,518 |
| Wool | 1,243 |
| Cotton | 211 |
| Raw hides & skins (except furskins) | 191 |
| Barley | 175 |
| Live animals | 140 |
Source: DFAT Stars Database
- China is the world’s largest wool importer, and Australia is the world’s largest supplier of fine wool.
- China will account for over 35 per cent of world cotton consumption in 2004-2005, and Australia is the 3rd largest supplier of uncarded cotton to China.
- China is the second largest Agrifood market in Asia, with annual food and beverage expenditure close to US$200 billion.
- Australia supplied 85 per cent of China’s beef imports in 2004.
- China is emerging as a promising export market for Australian wines.
- China's HYX Group bought the finest bale of wool ever grown (11.9 micron) at auction in Australia in March 2004 for $675 000, outbidding other Chinese, Korean and Italian buyers.
Mining and Energy
China is Australia’s 2nd largest export market for minerals and fuels, increasing 470 per cent in the past ten years to A$4.4 billion in 2004. Of our primary commodities exports, iron ore is by far Australia’s largest energy export to China, increasing 41 per cent to $2.45 billion in just 12 months. TheNorth West Shelf Venture will supply from 2006 Liquefied Natural Gas (LNG) to the Guangdong LNG Terminal and Trunkline Project Joint Venture, worth a total of A$25 billion over 25 years.
Top 5 Minerals and Fuels Exports to China
| Minerals and Fuels Exports | CY2004 |
| A$m | |
| Total Minerals and Fuels Exports | 4,376 |
| Iron ore | 2,446 |
| Crude petroleum | 460 |
| Coal | 417 |
| Other ores | 391 |
| Non-ferrous base metal waste | 213 |
Source: DFAT Stars Database
- China was the world’s largest importer of iron-ore in 2004
- China was the world’s largest consumer of steel in 2004
- In 2004, China became the world’s largest aluminium consumer, accounting for an estimated 21 per cent of global consumption
- China is now the world’s largest consumer of stainless steel, the major ingredient of which is nickel.
Manufacturing
China is Australia’s 4th largest export market for manufactures. Australia’s manufacturing exports totalled A$1.7 billion in 2004, up 214 per cent in the last 10 years. Aluminium (A$265 million), copper (A$156 million), and pigments, paints and varnishes (A$147 million) are the leading exports. This reflects China’s increasing demand for imported inputs into its expanding manufacturing sector and Australia’s capacity to competitively supply the Chinese market.
Top 5 Manufactures Exports to China
| Manufactures Exports | CY2004 |
| A$m | |
| Total Manufactures Exports | 1,708 |
| Aluminium | 265 |
| Copper | 156 |
| Pigments, paints, varnishes | 147 |
| Nickel | 142 |
| Pig iron | 95 |
Source: DFAT Stars Database
Other Australian manufacturing exports are also rapidly expanding, including internal combustion piston engines, veneers, plywood and particle board. Exports of photographic supplies have increased from a mere A$44,000 in 1995 to A$38 million in 2004.
Source: DFAT Stars Database
Services
Australia’s services exports to China in 2004 totalled A$1.27 billion. Education, travel and transportation are currently most important within this sector. There are growing opportunities for financial and banking services in China, particularly considering China’s increasing market flexibility and openness. There are currently a number of commercial and investment banks, including Macquarie Bank, Westpac, Commonwealth Bank, and ANZ operating in China, as well as seven Australian law firms. Australia Post has a joint venture operation, Sai Cheng Logistics International, with its counterpart China Post. The Commonwealth Bank of Australia has also set up the first life insurance joint-venture between Australia and China, the China Life CMG Insurance Co. Ltd.
Top 5 Services Exports (Latest detailed data)
| Services Exports | FY2003-2004 |
| A$m | |
| Total Services Exports | 1,187 |
| Education services | 434 |
| Personal travel (excl. education) | 377 |
| Transportation Services | 154 |
| Business travel | 73 |
| Other business services | 56 |
Source: ABS Regional Services Statistics
- China is the largest source of overseas student enrolments to Australia, with Chinese students accounting for 20 per cent of overseas students studying in Australia since 2001.
- In 2004, nearly 69,000 Chinese nationals were enrolled in courses in Australia, and an estimated 30,000 students were studying Australian programs in China.
- Chinese visitors to Australia are likely to hit a quarter of a million this financial year.
- The new head of General Motors China (Shanghai GM), one of China's biggest foreign investors, is Australian-born Kevin Wale.
- Soulmates Technology Australia, an innovative Australian matchmaking service, has recently expanded into China, based in Beijing.
Investment
China’s investment regime has developed over recent years, to take into account a more open economy, WTO commitments, and the support required by industries to maintain high growth rates.
In 2003, China was our 21st-largest investment destination, and Australia’s 14th-largest investor. Australia’s business presence in China covers manufacturing, property and business services, and a wide range of other sectors including finance, insurance, education, mineral exploration, information services and energy supply. Chinese enterprises have mostly invested in resources, energy and processing commodities, but manufacturing and real estate have also attracted investment.
Trade successes: in diverse industries and across large and small enterprises
Energy
Australia’s biggest ever single-value export deal was finalised in 2002 for the sale of A$25 billion LNG (Liquefied Natural Gas). The North West Shelf Venture will supply the Guangdong LNG Terminal and Trunkline Project Joint Venture with between 3-4 million tonnes of LNG per annum for 25 years, and will begin in 2006.
This has encouraged other Australian energy companies, including BHP Billiton, Gorgon Australian Gas, and Woodside Petroleum, to pursue similar mining and energy ventures, to cater for China’s massive energy consumption.
Architecture
Australian architectural firm Bligh Voller Neild will design the Beijing Aquatic Park – the largest Olympic Facility to be built for the Beijing Olympics.
The International Architectural Platform Australia (IAPA) is targeting architectural design jobs in China for Australian businesses, taking the initial risk out of doing business in China. The company is ensuring a proliferation of Australian park design and architecture in China. Aspect Sydney Pty Ltd have just won a major $4.5 million design project to create a park in Foshan in China’s Guangdong Province.
Agriculture
Between December 2003 and November 2004, the Australian Wheat Board (AWB) secured contracts for two and a half million tonnes of wheat with the China National Cereals, Oil and Foodstuffs Corporation (COFCO).
Australian Genetics Pty Ltd¸ based in Brisbane,has begun shipping Jersey heifers to China. Australian Jersey heifers are favoured in Asian countries for their ability to produce milk with higher butterfat and their ability to breed well in tropical, semi-tropical and temperate environments.
Manufacturing
Air International and PBR International have established joint ventures in China to manufacture automotive components.
ADInstruments are selling advanced diagnostic equipment to leading laboratories in China.
New Leader International is providing bath soaps & lotions to China.
Construction
The Leighton Group has participated in large construction services projects in China, building a railway between Guangzhou and Kowloon in Hong Kong, and other construction projects in Hainan Island, Shenzen and Shanghai.
Bluescope Steel provided the steel decking for China's tallest skyscraper, the Jinmao Tower (88 stories), in Shanghai. They also provided the roofing for Beijing International Airport, the Guangzhou Olympic Centre, and recently won the contract to provide the decking for what is planned to be the world's tallest building, the World Financial Centre in Shanghai.
Services
Digital Pictures Iloura, based in Sydney, produced VFX shots and digital grading for the critically acclaimed Chinese feature film, “House of Flying Daggers”, which opened in Australia recently.
Seven Australian law firms have offices in China, including Mallesons Stephen Jaques, Lintang and Co., Allens Arthur Robinson, Blake Dawson Waldron, Hunt and Hunt, Deacons, and Minter Ellison.
The Commonwealth Bank of Australia has set up the first life insurance joint-venture between Australia and China.
Australia Post has a joint venture operation with its counterpart China Post.
Mining
Longwall Associates Australia, based in Central Queensland,is selling custom designed face conveyors to Chinese long-wall mines. China has 1300 longwall mines, the largest quantity in the world.
Environment
Rapid Building Systems, based in South Australia,is producing large 12 metre fully recyclable walls used to construct multi-story buildings, which are perfect for the new 'green' approach taken by the Chinese government. They are actively reducing China’s severe air pollution problem in urban areas.