In recent decades, trade between the Australia and China have made an increasingly significant contribution to growth in global seaborne trade, and the signing of the China-Australia Free Trade Agreement in 2015 is driving further co-operation, says a report by Clarkson Research Services.
But just how important has the impact of trade between these two countries been?
Between 2006 and 2016, Chinese imports from Australia grew by a CAGR of 17% p.a. to reach an estimated 792mt in 2016. The sheer volume of trade flowing between the two countries has meant each now fulfils a vital role for the other.
Australia is China’s top trade partner by some distance in terms of tonnes, with more than a third of China’s seaborne imports in tonnes sourced from Australia in 2016, up from a fifth in 2006.
Australia has thus played a key role in feeding China’s growing appetite for raw materials, as China’s economic miracle unfolded. China is also Australia’s top trade partner, accounting for a larger proportion of Australia’s exports and imports in terms of value than any other country, providing a key source of national revenue.
Australia’s vast mineral deposits mean that most of China’s imports from Australia are dry bulk cargoes. China’s dry bulk imports from Australia grew from 146mt in 2006 to 751mt in 2016, with around 85% of this growth accounted for by surging iron ore imports as China’s steel industry blossomed
Meanwhile, China’s swing from a coal exporter to major coal importer in the late 2000s as trading opportunities opened up saw Australia quickly emerge as China’s top supplier of coking coal, while Australia is also now China’s largest foreign provider of barley and wheat.
Australian exports of minor bulks to China have also increased, by a CAGR of 13% p.a. in 2006-16, to reach 35mt last year, supported by growing bauxite exports. Overall, Chinese dry bulk imports from Australia now account for a significant 15% of global seaborne dry bulk trade in tonnes, up from 5% in 2006.
This share could well grow further if China’s stricter environmental policies see a continued preference for Australia’s high-quality iron ore and coal.
While China’s imports of other cargoes from Australia are relatively limited, some are still seeing rapid growth. China’s imports of LNG from Australia more
than doubled y-o-y in 2016 to around 12mt, with further significant growth expected in coming years as additional Australian LNG projects
Overall, including all cargo types, one in every fourteen tonnes shipped by sea in 2016 globally was exported from Australia to China, with growth in trade between these two nations alone accounting for an astonishing 20% of the total expansion in global seaborne trade over the last decade.
So, the importance of Australia-China trade is clear to see from a range of perspectives, with this one route playing a major role in shaping trends in global seaborne trade. While there remain concerns over the outlook for growth in Chinese raw material demand, there can be no doubt over how important this particular trading partnership has become.