China-Australia relations: iron ore prices helped offset weakened trade with China in 2020

In the absence of trade restrictions, Australia’s exports of goods and services to China might have risen by double digits 2020, rather than just 0.3 per cent, economist says

While exports such as wine suffered from trade disruptions with China, Australia was able to mitigate the damage to exports such as coal by redirecting them to other countries

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Australia faced several disruptions in its trade with China last year. Photo: Getty Images

Published: 4:30am, 5 Feb 2021Updated: 9:16am, 5 Feb 2021

Australia’s export figures for the final month of a tumultuous past year confirmed that momentum slowed in some trade with China amid various restrictions, but unbarred exports remained strong and buoyed overall trade between the two countries, according to the final December trade data from the Australian Bureau of Statistics.

While full-year exports of both goods and services to other countries rose by 3.9 per cent compared with the prior year, those to China rose only 0.3 per cent, according to an analysis by Capital Economics.

Since May, Australia has faced several trade disruptions, including slower barley and wine exports to China, due to new anti-dumping duties. Australia has also suffered unofficial bans to its coal, copper, lobster and log timber trade since October.

The 0.3 per cent annual rise in exports to China was mostly a result of the soaring price of iron ore – Australia’s largest export to China – which means other exports to China would have been largely flat, said Capital Economics’ senior Australia & New Zealand economist, Marcel Thieliant.

“That [0.3 per cent] figure is understating the drag, because iron ore accounted for 55 per cent of Australia’s exports to China in the year to June 2020, but [iron ore accounted for] only 8 per cent of exports to other countries,” he said.