Australiaâ ™s total trade recorded US$245 B in 2006. Of this, total imports were US$127 B, while total exports were US$118 B. Australia is often regarded primarily as a producer of agricultural commodities, minerals and energy. Its top export was coal, coke & petroleum, which account for approximately 25% of total exports. Other key exports include metal ores, minerals & metals, machinery and gold. Conversely, Australia is a heavy importer of manufactured goods such as machinery, consumer goods, transport equipment, as well as fuel & lubricants.

The top export markets of Australia include Japan, China, Korea, USA, New Zealand and the ASEAN countries. Japan has been Australiaâ ™s largest export market since the mid-1960s. At its peak, Japan account for over 60% of Australiaâ ™s exports. However, in the aftermath of the Asian economic crisis of the late 1990s and the long period of sluggish growth in Japan, this share has fallen significantly over the years, accounting for approximately a fifth of Australiaâ ™s exports in 2006. In terms of imports, USA, China, Japan, Germany, Singapore and the UK are some of the top import market for Australia.

The China phenomenon

There is a very significant phenomenon in the trade between Australia and China. Over the past five years, China has grown significantly in importance to Australia as a trading partner, accounting for nearly 12% of Australiaâ ™s merchandise exports in 2006 (up from 5.5% as recently as 2000). Its growth has also been rapid, growing at a CAGR of 23% between 2000 to 2006. Key exports to China include metal ores & scrap, textile fibres, non-ferrous metals as well as coal and petroleum products.

Being the factory of the world, China has also increased rapidly as a source of merchandise imports for Australia, accounting for 14% of the total in 2005, almost double the 7.6% in 2000. Key imports from China includes machineries, clothing & accessories, footwear as well as telecom equipment.

Besides being a significant trading partner to Australia, China is also increasingly becoming an important investor in Australia. According to the Statistics of Bureau of Australia, Chinese investment in Australia exceeds US$4.8 B, contributing in no mean measure to Australian exports and jobs. Similarly, Australia has also become a major destination for Chinas outward investment.

By far, the resource and mining sector has received the lions share of the investment from China. Major projects in this sector include Mount Channar iron-ore (US$96 M) and Portland Aluminum Smelter (US$80 M). The single largest Chinese investment in Australia, amounting to US$240 M, is in the mining sector. Currently, Chinese companies are studying in more than 15 minerals and energy projects in Australia worth more than US$80 B. About half of the projects are in iron ore, the rest in coal, natural gas and non-ferrous metals.

Agriculture is another area of concentration of the Chinese investment. Over the years, Chinese companies have made substantial investment in dairy, cattle and cotton farming in Australia. However, it is the service sector that has attracted the largest number of companies from China. Quite a number of Chinese companies are engaged in import and export business, and air and ocean transportation as well as financial services, playing an important role in increasing the flow of goods and services between China and Australia.

With Chinas fast-growing economy, which is expected to average about 8% in the next 5 years, the countrys huge market potential is being increasingly materialized. In addition, Australia is currently engaged in talks with China, with a view to negotiating bilateral free trade agreements. If materialized, it would bring bilateral economic and trade relations between China and Australia to greater heights.