China’s Share of Australian Exports Hits 48.8%, an All-Time High
(AFR) — China’s share of Australian exports have reached an all-time high, rising to 48.8% and driving the 30th consecutive monthly trade surplus to A$8.2 billion ($5.8 billion).
Official figures showed the exports to China — mainly due to iron ore, especially in the June quarter — reached a record A$14.6 billion. Goods exports to China are now worth around 8.5% of Australia’s GDP.
“The sharp rebound in goods exports comes as China aggressively stimulates its economy, seemingly outweighing recent political headwinds,” NAB’s Tapas Strickland said.
Rural exports also lifted after the fall in May, rising 3.6% in June with wool exports surging. China is the largest market for Australia’s wool, with upwards of 90% of Australian wool being exported to China.
The surge in exports to China helped Australia record its largest financial year trade surplus of A$77.4 billion.
As a share of GDP, NAB estimates that the June quarter trade balance was worth 5% of GDP, up from the March quarter’s 3.8%.
Strickland said the trade balance could add around 1.25 percentage points to overall June quarter GDP. The June quarter is usually strong for commodity exports, but Australian producers have also benefited from supply disruptions in Brazil over recent months.
While Australia’s goods exports surged, services exports saw their biggest quarterly drop since records were kept almost 50 years ago.
Service exports dropped 30% over the quarter to A$17 billion — the lowest quarterly figure since 2015. However service exports in the month of June alone rebounded up 4.2%, driven almost entirely by a rise in travel service exports.
Trade Minister Simon Birmingham said that despite the record goods trade he recognized the significant fall in service exports.
“We also recognise the current COVID-19 crisis continues to place immense pressure on parts of our services sector, including tourism and education businesses, many of whom felt the earliest and deepest aspects of the economic downturn.
“That is why our government has taken significant steps to support businesses and jobs across the tourism sector through cash payments of up to A$100,000 and the extension of the JobKeeper payment until the end of March next year.”
The worth of business travel to Australia during the quarter collapsed to just A$28 million, down from A$611 million in the March quarter, while all other travel categories to Australia all dropped significantly during the quarter.
Australia’s financial services that are considered exports increased by A$117 million to A$1.5 billion in the quarter, while our charges for the use of intellectual property increased A$17 million in the quarter. Our exports of telecommunications, computer and information services also rose A$82 million to A$1.5 billion. Even our consulting services rose.
The ABS reported that categories which include education were not yet available for collection. The ABS also did not provide a breakdown of the data by country.
One of the bright spots was some recovery in imports which can signal higher domestic consumption activity.
Consumption imports were up 7.2% in June almost reversing the fall in May.
“With the further lockdown in Melbourne, the recovery in consumption imports may be short lived though,” ANZ’s Hayden Dimes said.
Citi’s Josh Williamson said strong exports and domestic retail trade were now less important given the impact from Victoria’s outbreak.
“While we welcome the resilient international trade and confirmation of the solid preliminary June retail trade data, they are now largely academic in nature,” Williamson said.
This story was originally published by Australian Financial Review
Contact editor Yang Ge (email@example.com)
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