Australia Sees Record High Trade Surplus Despite China’s Trade Sanctions

January 25, 2021 Updated: January 27, 2021

The Chinese regime’s trade war on Australia appears to be backfiring after strong demand for Australian exports have resulted in the nation recording its fourth-highest trade surplus.

Preliminary international trade figures released by the Australian Bureau of Statistics (ABS) on Monday show Australia recorded a $9 billion goods trade surplus in December, up from $7.4 billion in November.

While imports from China fell by $641 million or 7 percent, exports to China increased by $2.3 billion or 21 percent in December, driven primarily by iron ore and wheat. This comes amid China’s economic trade sanctions, which has seen trade disruptions to Australian beef, wine, barley, lobster, timber, and cotton.

Furthermore, China paid 9 percent more per tonne for iron ore in December compared to in November while total iron ore exports increased by 15 percent.

Australia-China Relations Institute Director James Laurenceson told The Australian that Beijing has been “unable or unwilling to wean itself of low-cost, high-quality Australian iron ore.”

“The result is the second-highest total value of Australian goods exports ever, down just 2 percent on last year’s record high.

“Even in sectors where China has greater choice in suppliers like barley, coal and copper, Australian producers have by and large been successful in finding alternative markets, even if they don’t offer the price premium China previously did.

“[W]hat these numbers show is that basic economic calculations still loom large,” Laurenceson added.

Overall, the $4.9 billion increase in total exports recorded for December was primarily driven by metalliferous ore shipment. Coal exports rose to 27 percent, thermal coal up 25 percent and hard coking coal up 54 percent.

ABS head of international statistics, Katie Hutt, said Australia’s exports showed “steely resolve.”

“While hard coking coal exports to China have diminished since mid-2020, increased exports to India, Japan and South Korea have offset some of the fall,” Hutt said.

Since the ban of Australian coal, China is experiencing power shortages in large swathes of southern China, resulting in people’s homes and workplaces not getting enough heat.

Among Australia’s largest coal export destinations, coal exports rose with India up $272 million or 38 percent, Japan up $237 million or 27 percent, and South Korea up $148 million or 48 percent.

Conversely, total imports decreased $2.5 billion or 9 percent in December, which was evident with transport equipment, telecommunications and sound equipment.

Offsetting the decreases were specialised machinery, up $132 million or 13 percent, and road vehicles, up $66 million or 2 percent to $3.7 billion. Hutt said these figures highlight the pandemic’s impact on the imports of motor vehicles in early 2020.

Additional gains were seen in cereals with wheat shipments up to $604 million or 423 percent, and barley up $182 million or 254 percent. Exports of wheat to China made up approximately one-third of total wheat exports after nil exports since August 2020, while approximately 42 percent of barley exports headed for Saudi Arabia.

“Strong growing conditions in Australia’s wheat belt and lower than average rainfall in the Black Sea growing region has driven demand for Australian wheat to record highs,” Hutt added.

On Nov. 15, 2020, Australia and 14 other Indo-Pacific countries signed the Regional Comprehensive Economic Partnership (RCEP), which is set to diversify trading opportunities with other markets.

Trade Minister Simon Birmingham said: “This agreement covers the fastest-growing region in the world and, as RCEP economies continue to develop and their middle classes grow, it will open up new doors for Australian farmers, businesses and investors.”