China is Australia’s largest trading partner. It buys almost a third of all Australian exports, and is the top overseas market for many Australian goods and services. Trade and investment with China is a big part of Australia’s future.
The Australia-China economic relationship is extensive and growing strongly. The two economies are highly complementary and provide a broad range of opportunities for two-way trade and investment.
Trade in goods and services
Resources and energy make up the largest share of Australia’s exports to China, with iron ore (53 per cent of total exports to China in 2013-14), coal and gold leading the way.
As China’s economy develops and the consumption habits of its rising middle class begins to change, opportunities are opening up for a more diversified relationship with a growing focus on premium agricultural exports and services such as finance, health and aged care, as well as professional services. For example, over the last five years Australia has seen significant growth in the export of wine (17 per cent), cheese (35 per cent), financial services (97 per cent) and insurance and pension services (18 per cent).
Trade in Goods and Services with China
Largest two-way trading partner (surpassing $159 billion in 2013-14), accounting for almost a third of Australia’s exports.
Largest export market for agriculture, resources and services.
Largest destination for service exports (grew by 11.3 per cent to $7.5 billion in 2013-14).
Largest source of tourism income in 2013-14 at $5.3 billion, up 16 per cent from the previous year.
Largest source of overseas student enrolments in 2013-14.
Resources and energy also play an important role in the China-Australia investment relationship. Chinese investment in Australia has been growing strongly in recent years, though is still below that of Australia’s traditional investment partners the US, UK and Japan. Foreign investment in Australia means greater infrastructure, more productivity and more jobs for Australians.
Increasing numbers of Australian businesses are entering the Chinese market with great success, with banking and wealth management the leading sector of Australian direct investment in China. Investing in China means Australian businesses can tap this large, growing and increasingly sophisticated market.
The Australia-China Investment relationship
The stock of two-way investment between Australia and China is growing, reaching $62 billion in 2013.
China became Australia’s 8th largest investor in 2013 ($32 billion), with 41 per cent year-on-year growth.
Total stock of Australian investment in China was valued at $30 billion in 2013, making China our 12th largest investment destination.
Despite the global financial crisis, over the last 10 years Chinese investment in Australia has grown by almost 34 per cent, with Australian investment in China growing almost 39 per cent over the same period.
High Level Economic Engagement
The China-Australia FTA augments the high-level bilateral mechanisms already in place between Australia and China.
A comprehensive program of high level visits and cooperation activities enable Australia and China to explore opportunities for closer economic ties and to discuss issues relating to the global economy.
In addition to regular meetings between the Australian Prime Minister and the Chinese Premier, the inaugural Strategic Economic Dialogue (SED) between the Australian Minister for Trade and Investment and the Treasurer, and the Chairman of China’s National Development and Reform Commission was held in Beijing in June 2014. The Minister for Trade and Investment also meets regularly with his counterpart, the Chinese Commerce Minister at the Joint Ministerial Economic Commission.
Australia and China have a growing range of common interests in multilateral and regional forums. Both countries are members of the G20 and APEC (Asia Pacific Economic Cooperation), with Australia and China respectively chairing these important global and regional forums in 2014. Australia and China also share interests as members of the World Trade Organization, which China joined in 2001, and international financial institutions such as the International Monetary Fund and World Bank.