China’s imports from Australia rose by 49.3 percent to $14.865 billion in April, accelerating from the 20.9-percent import growth rate recorded in the first three months as the price of iron ore – a major item China buys in bulk from Australia – surged to a record high. But as China pushes diversification efforts, analysts said a trade decoupling between the two countries is imminent amid icy bilateral relations.
In breakdown, China’s exports to Australia rose by 19.7 percent to $5.25 billion in April compared with a year earlier, according to the Global Times’ calculation based on data released by the General Administration of Customs on Friday. That compared with a 50.5 percent rises in exports in the first three months.
Chinese observers expected Australia’s anti-China political stance will soon weigh on bilateral economic and trade relations, which were supposed to be complementary and bring mutual benefits to both countries. A flattening economic relationship with China could also deal a blow to Australia’s post-virus economic recovery.
The release of the data also comes one day after China’s top economic planner indefinitely suspended all activities under the China-Australia Strategic Economic Dialogue, marking the first time that a diplomatic mechanism between the two countries was frozen after the Australian government fired major shots at China.
“The reason why China’s imports from Australia expanded in April is that China still buys bulk commodities from Australia, in particular iron ore whose price has been jumping to a record high. That, in turn, inflated the value of imports,” Chen Hong, a professor and director of the Australian Studies Center at the East China Normal University, told the Global Times on Friday.
Some Chinese importers also rush to stockpile Australian iron ore over political risk-aversion concerns, which also drove up the trade volume in April, the Global Times learned.
But such imports are likely to continue dwindling this year amid Chinese exporters’ diversification push to source iron ore from alternatives such as Africa, observers noted.
According to data sent by Beijing Lange Steel Information Research Center to the Global Times on Friday, China imported 713 million tons of Australian iron ore in 2020, accounting for 61 percent of China’s overall iron ore imports. The share decreased 7.51 percentage points compared with that of 2019, showing an initial result of China’s efforts to diversify import channels to reduce reliance on Australia.
Bilateral investment and trade ties between China and Australia had already seen a freefall as bilateral relations took a dive, starting in 2018 when Australia became the first country to ban Chinese telecom firm Huawei’s 5G participation.
To date, a long list of Australian exports to China, from wine and lobster to timber and hay, has run into problems, and those exports have almost completely stalled.
Analysts said Australia’s recent provocative action against China could further send bilateral trade relations into an abyss, hurting the economy of Australia – which is more reliant on China.
“The deteriorating relations, of which Australia is the one to blame, coupled with Canberra’s discriminative moves against Chinese firms, will further hurt Chinese businesses’ confidence in investing in Australia,” Chen said.
In April, the Australian federal government tore up an agreement between the state of Victoria and China on the Belt and Road Initiative (BRI), unilaterally escalating bilateral tensions.
A woman walks in the rain in Sydney, Australia, March 20, 2021. Photo: Xinhua
