The economic relationship between Australia and China

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Australia and China have been engaged in an economic partnership for some time. This relationship has had its ups and downs over the years, but both countries have been looking to further stabilise their ties through a meeting of their leaders on Tuesday.

There is expected to be a focus on mutual trade and investment, and possibly even collaboration on major infrastructure projects. This article will examine the current economic relationship between Australia and China and how their leaders plan to stabilise this relationship moving forward.

Overview of the current relationship between Australia and China

Australia and China maintain a growing and mutually beneficial economic partnership. Over the past two decades, the two countries have developed an increasingly close relationship focused on improving bilateral trade and investment. As a result, according to official statistics from Austrade, trade between Australia and China has reached record levels, with more than $144 billion in two-way trade in 2019-2020.

China is now Australia’s largest trading partner, with approximately an equal contribution of exports and imports. China is also the leading destination for Australian exports of goods, followed by Japan and South Korea. Exports to China increased by 6% in 2019-2020, with key items including iron ore, copper ore & concentrate, coal, education-related travel services, beef & veal and gold. On the other hand, Australia relies heavily on imports from China for everyday items such as electronics ($11bn worth of electric machinery was imported from China in 2019-2020), furniture ($7bn) and clothing ($2.5bn).

In addition to trade between the two countries, Chinese investment into Australia has surpassed $95 billion over the past decade – propelled by Chinese investments into infrastructure projects across multiple industries such as roads/bridges & ports (valued at over $56Bn), electricity generation plants valued at over $13Bn) and oil & gas exploration projets valued at over $15Bn). The two nations are also connected through foreign direct investments – with Chinese firms investing generously into a variety of traditional industries including retailing/franchising businesses($28Bn) real estate properties /construction ($17Bn) professional/financial activities ($9Bn).

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Australia, China leaders looking to stabilise ties at meeting on Tuesday

Leaders from Australia and China are set to meet on Tuesday to discuss the economic ties between the two countries. The two nations have a rich history of trade and investment, but the relationship has been fraught with tensions in recent years. This meeting is a key opportunity to step up dialogue and stabilise ties to ensure a secure future for both countries.

Let’s explore the economic relationship between Australia and China.

Overview of trade between Australia and China

Australia and China established formal diplomatic relations in 1972 and now enjoy an established bilateral trade relationship. In 2018, the value of Australian exports to China was $106 billion which accounts for 33% of Australia’s total goods exports. The main import into Australia from China was machinery and transport equipment valued at $55 billion, equating to 43 percent of total imports into Australia.

From 2002 to 2012, the value of trade between Australia and China doubled every four years before plateauing between 2013-2018 at an average growth of 7%. This high growth rate indicates a strong economic partnership between the two countries however from 2013-2018 it has remained consistent, with peak growth recorded at 9% in 2017.


The Australian Government has also recently made significant investments into Chinese markets as part of their strategy to diversify their economic portfolio. From 2016-2017 significant investments include:

  • $30 million investment in a medical technology fund
  • $70 million investment into a Shanghai-based venture capital fund
  • $30 million equity investments into domestic Chinese tech startups such as Mobike and Didi Chuxing.

These investments further demonstrate the strength of the relationship between the two nations and reinforce the importance of China as a key trading partner for Australia going forward.

Overview of Chinese investment in Australia

The Australia-China economic relationship is growing rapidly. Australia and China have firmly established a mutually beneficial cooperation in trade, investment and people-to-people contact over the past decade. As a result, China has become Australia’s largest trading partner while Australia has moved up to become China’s fifth largest foreign investor.

Chinese direct investment in Australia has increased significantly since 2013. According to KPMG and the Australian Treasury data, Chinese direct investments into the country exceeded US $10 billion by April 2018, for a total investment of over US $24 billion. Major sectors investing from China have included real estate, energy, finance and health care.

Analysts expect Chinese foreign direct investment in Australia to grow even faster over the next few years as more businesses seek to establish presence or expand their activities on the lucrative Australian market. This will provide opportunities for companies looking for new markets and sources of business; it is also likely that more Chinese capital will be diverted into areas such as education, tourism and technology innovation to establish deeper business ties between both countries.

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Diplomatic Relations

The Australia-China relationship has been a significant economic and internal political point of discussion in recent times. Leaders from both countries are looking to stabilise diplomatic ties during a meeting on Tuesday, focusing on economic relations between the two countries.

This article will examine the Australia-China relationship’s economic dynamics and the diplomatic meeting’s potential implications.

Overview of diplomatic relations between Australia and China

Australia and China established diplomatic relations in 1972, the bilateral relationship between the two countries has been one of deep economic, cultural, and political significance. Both countries have mutually beneficial agreements to support their economies’ continued development.

Their two-way investment relationship underlines Australia’s strong trade relationship with China. China is Australia’s biggest investor and single largest export market, while Australia is China’s biggest foreign import source and a significant foreign direct investment (FDI). The bilateral trade volume grew from almost nothing in 1982 to over 249 billion US dollars in 2018. Moreover, in recent years, new opportunities for mutual growth have opened up as Chinese firms become involved in many Australian industries, including transport infrastructure and renewable energy sectors such as solar power.

Politically both countries have maintained good relations and strongly support United Nations Security Council reforms that promote cooperation among all members. Safety regulations are also strengthened through their joint efforts in ensuring maritime safety around large areas of Pacific waters where shipping operations are common. In addition, several high-level dialogues are underway between Australia’s Department of Foreign Affairs & Trade (DFAT) & the Chinese Ministry for Foreign Affairs that aim to deepen mutual trust between governments.

Representatives from both countries most recently gathered at the third Australian-China Roundtable on 15 August 2016 to facilitate further engagement through cooperative projects such as agricultural production, innovative technologies research & commercialisation, & the protection of intellectual property.

Overview of recent developments in diplomatic relations

In recent years, there have been significant developments in the diplomatic relations between Australia and China. The two countries have a strong economic relationship, with bilateral trade reaching more than $138 billion in 2017. In 2015, The Free Trade Agreement between China and Australia officially entered into force, providing an even better economic cooperation foundation for both countries. In September 2018, Chinese President Xi Jinping visited Australia and signed new agreements expanding cooperation on education, agricultural produce and finance.

Although the relationship has grown significantly over many years, there continues to be ongoing tension in some sectors of diplomatic relations. This is largely due to differences of opinion on various global issues such as maritime disputes, human rights and global warming. However, as both nations are important players in the region and world economy, developing bilateral diplomatic relations is key to ensuring their respective countries remain secure despite these tensions. As a result of President Xi’s visit in 2018 further steps were taken towards greater communication between both governments establishing regular dialogue platforms across a range of sectors including infrastructure investment and business facilitation processes which have proved beneficial to the Australian and Chinese economies.

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Impact of the Coronavirus

The Coronavirus pandemic has caused a massive disruption to global economic ties, particularly for countries like Australia and China. However, both countries’ leaders are looking to stabilise ties and create more resilient economic relationships at their meeting on Tuesday.

Let’s look at the current economic ties between Australia and China and the Coronavirus’s impact on them.

Overview of the impact of the coronavirus on the economic relationship between Australia and China

The outbreak of the coronavirus, officially known as COVID-19, has had a major impact on the economic relationship between Australia and China. There has been a sharp decline in trade between the two countries since the start of the pandemic, with exports to China dropping by more than 10 per cent. This drop in exports has been attributed to significantly reduced demand for Australian exports due to a combination of factors, including travel restrictions and reduced purchasing power of Chinese consumers due to containment measures implemented by Chinese authorities.

Furthermore, the restrictions implemented throughout both countries have caused logistical issues for many businesses that rely on imports and exports from both countries. Issues such as this can lead to supply chain losses, significantly impacting businesses and their operations. In particular, it is thought that consumer goods industries, including food and beverages, suffered due to reduced availability of imports. However, some sectors including dairy continue to remain resilient during this period.

Australia’s services sector has also been hit hard with fewer opportunities for international tourists to travel abroad leading many tourism-based businesses to suffer huge losses in revenue since March 2020 despite possible retention of domestic tourists during this period. This significantly reduces opportunities for hospitality industry employees who rely largely upon these customers.

Overall, it is likely that this pandemic will continue affecting economic and trading relationships between Australia and China up until at least 2021 if not longer. Therefore all businesses between this relationship must become aware.

Overview of the efforts of the Australian and Chinese leaders to stabilise ties

In the wake of the coronavirus pandemic, Chinese and Australian leaders have taken several steps to strengthen the relationship between their countries and stabilise ties that the outbreak had weakened. On a diplomatic level, both countries had regular talks, meetings and agreement-signings. Australian Prime Minister Scott Morrison was also one of China’s earliest international partners who offered support to China in fighting against the disease.

At business level, although Australia’s consumer goods, exports and services have all been adversely affected by the COVID-19 pandemic in 2020, the Federation of Industry and Commerce for Australia-China Relations has declared its belief in strengthening cooperation between smaller businesses across both countries through financial aid. In addition, state governments such as New South Wales have also established commerce committees to evaluate regional trading activities effectuated by stricter border control measures or quarantine policies.

Apart from economic relationships at institutional level, Australia’s strong presence in China’s tertiary education sector has seen a new round of student exchange programs and projects aimed at bridging ties on cultural level. Therefore, the long-term goal for both Australian and Chinese leaders is clear: resuming closer trade links after addressing immediate medical issues caused by this global health crisis.


The recent meeting between Australia and China leaders proved to be a positive step towards improving economic ties between the two countries. Although the meeting outcome was not immediately clear, progress was reportedly made on several issues such as trade, investment, and cooperative initiatives.

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