Australia-China relations are characterised by strong social, economic and trade ties. While Australia is a leading source of resources for China, more recent trends show that Australian exports are expanding well beyond the resource sector to include goods such as beef, seafood, wine and baby formula – reflecting the surge of the Chinese middle-class.

While both sides have become subject to increasingly tense global geopolitical relationships, the bilateral engagement remains as strong as ever. The latest Australian Bureau of Statistics (ABS) International Trade in Goods and Services highlights that China was the destination for a record 40 per cent of Australian exports in June1. This compares to the 30 per cent three years ago, and 20 per cent a decade ago. In fact, the last time a single country had taken such a large proportion of Australia’s merchandise exports was in 1952 when it was still under heavy British influence.

China’s natural gas consumption has soared amid a gasification program that is switching millions of households and factories to natural gas from dirtier fuels such as coal. Australia has played a crucial role, supplying over 53 per cent of China’s LNG imports during the first five months of 20192.
As China has ramped up its investment in infrastructure and construction, Australia is the key trading partner, supplying 40 per cent of China’s coking coal, used in steel making and 65 per cent of iron ore.
But beyond the traditional resource exporting-importing relationship, the growth in the Chinese middle class has created an increase in demand for more sophisticated goods and services. Australia has created excellence in areas such as medical devices, health & wellness and education. One of the most striking features of Australia’s trade relationship has been the growth of non-traditional exports. While the big three – iron ore, coal and LNG account for more than two-thirds of merchandise exports to China, the combined value of the next 20 largest Australian exports have risen by more than 70 per cent over the last five years. This includes barley, beef, pharmaceuticals, crayfish, wine and baby formula – reflecting the rapid rise of the middle-class Chinese and increasing appetite for more luxury goods. For both sides, it is good business and a driving force behind the entire trade relationship.

Education and tourism are two significant contributors to economic growth and cross-cultural education. Australia is the third most popular international student destination in the world, currently home to nearly 700,000 international students. While its educational institutions may be relatively young compared to universities such as UK’s Oxford or the US’s Harvard, they are up these with the best. The University of Melbourne, Australian National University, University of Sydney, University of Queensland, University of New South Wales and Monash University were all ranked in the top 100 universities3. In 2018, China accounted for approximately 38 per cent of all overseas student enrolments.
It is well known that China is Australia’s largest and most lucrative source of tourism with over 1.3 million Chinese visiting Australia in 2018, accounting for more than 15 per cent of total inbound market and spending $11.5 billion. But what is less well known is that 700,000 Australians visit China annually and Australia ranks as the 13th largest source of inbound tourism to China.

China’s transition to more sophisticated goods and services will require high quality human resources, well-developed infrastructure, well-developed financial systems and a good regulatory system. Australia has the expertise to help develop these fundamental structures and systems. Australia’s public sector is very efficient with a number of world leading areas such as budgeting, health administration and social security. Australia’s financial sector is well regarded internationally for its efficiency and effectiveness. The capital ratios for Australian banks have been described by the Australian Prudential Regulatory Authority (APRA) as ‘unquestionably strong’, placing them among the most sound and stable banks in the world3. All factors considered, create encouraging tailwinds to deepen the quality and level of interaction between the two countries.
The Australia-Chine relationship will continue to strengthen as both countries are dependent on each other to achieve economic and social objectives. It was only last month, in October that the Victorian government signed a new deal with China that will “help fast track cooperation in key areas of infrastructure, innovation, ageing and trade development”5.

End Notes
1. ABS International Trade in Goods and Services October (
2. Australia China LNG (
3. Times Higher Education World University Rankings 2020 (!/page/0/length/25/sort_by/rank/sort_order/asc/cols/stats)
4. APRA ‘unquestionably strong’ capital benchmarks (
5. Victoria-China strategy (

by  Gavin Ezekowitz

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