{"id":7490,"date":"2020-06-18T08:30:00","date_gmt":"2020-06-17T22:30:00","guid":{"rendered":"https:\/\/testblogs.griffith.edu.au\/asiainsights\/?p=7490"},"modified":"2020-06-18T08:06:17","modified_gmt":"2020-06-17T22:06:17","slug":"analysis-whither-australia-china-trade","status":"publish","type":"post","link":"https:\/\/testblogs.griffith.edu.au\/asiainsights\/analysis-whither-australia-china-trade\/","title":{"rendered":"ANALYSIS | Whither Australia-China Trade?"},"content":{"rendered":"\n<p>The Australia-China trade relationship is currently under significant strain.\u00a0 In the long run, increased protectionism would not improve Australia\u2019s economic welfare.\u00a0<\/p>\n\n\n\n<p>In light of the COVID-19, disruption to supply chains, calls are being made for Australian industries to become more self-sufficient, which implies protection against Chinese imports.\u00a0Protectionist measures would stymie economic gains to be had from continuing to pursue trade opportunities that accord with Australia\u2019s comparative advantages.\u00a0The COVID-19 crisis also raises the important question of how much will China\u2019s earlier economic recovery assist Australia\u2019s recovery in light of China\u2019s status as Australia\u2019s single largest trading partner.<\/p>\n\n\n\n<p><strong>Australia-China Trade and the Macroeconomy<\/strong><\/p>\n\n\n\n<p>China is well in front as Australia\u2019s\u00a0<a href=\"https:\/\/www.dfat.gov.au\/about-us\/publications\/trade-investment\/trade-at-a-glance\/Pages\/trade-at-a-glance\">number one<\/a>\u00a0trading partner, accounting in 2018-19 for around 26 percent of total two-way trade. Japan is second at 10 percent, and the US third at 9 percent.\u00a0Breaking down that two-way China trade, goods and services account for 33 percent of Australia\u2019s total exports and 19 percent of total imports.<\/p>\n\n\n\n<p>Is this share disproportionately large? If so, relative to what? In terms of relativities, consider Canada\u2019s trade situation. Canada is an Asia-Pacific mid-sized economy roughly comparable to Australia in terms of level of development and has a strong trade relationship with the United States, a regional and global economic superpower.\u00a0Two-way trade between Canada and the US accounts for 75 percent of Canada\u2019s total two-way trade, some three times more than Australia-China two-way trade.\u00a0 Meanwhile, Canada\u2019s two-way trade with China is a mere 5 percent of its total trade. By Canada\u2019s standard, there is nothing unusual about the scale of Australia\u2019s trade with a proximate economic superpower, especially given its complementary nature. Indeed, it\u2019s what David Ricardo\u2019s\u00a0<a href=\"https:\/\/www.investopedia.com\/terms\/c\/comparativeadvantage.asp\">classic theory<\/a>\u00a0of comparative advantage would predict.<\/p>\n\n\n\n<p>What then of the macroeconomic significance of Australia\u2019s trade with China?While dynamic economic gains arise from increased specialisation in production and expanded international trade, these gains accrue over the longer term.\u00a0Many commentators are wont to say Australia\u2019s short-term macroeconomic performance is also inextricably linked to China\u2019s. But the claim that the Australian economy\u2019s quarterly GDP performance is essentially \u201cMade in China\u201d is exaggerated. While China may account for 33 percent of the country\u2019s exports, Australia\u2019s exports in total account for 22 percent of its GDP. China therefore only directly affects around 7 percent of Australia\u2019s aggregate demand via the export channel.<\/p>\n\n\n\n<p><em>Please click here to read the full \u201c<a href=\"https:\/\/www.internationalaffairs.org.au\/australianoutlook\/whither-australia-china-trade\/\">Whither Australia-China Trade?<\/a>\u201d article published by Australian Institute of International Affairs, written by <a href=\"https:\/\/testblogs.griffith.edu.au\/asiainsights\">Griffith Asia Institute<\/a> researcher, <a href=\"https:\/\/experts.griffith.edu.au\/18543-tony-makin\">Professor Tony Mankin<\/a>.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Australia-China trade relationship is currently under significant strain. Professor Tony Mankin from the Griffith Asia Institute shares his insights.<\/p>\n","protected":false},"author":14,"featured_media":7492,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_newsletter_tier_id":0,"footnotes":""},"categories":[1053,245,1055],"tags":[602,284,639,1249,401],"class_list":["post-7490","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-australia","category-china-and-north-east-asia","category-economies-and-development","tag-australia","tag-china","tag-economics","tag-macroeconomics","tag-professor-tony-makin"],"acf":[],"modified_by":"Jill Moriarty","yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>ANALYSIS | Whither Australia-China Trade? | Griffith Asia Insights<\/title>\n<meta name=\"description\" content=\"The Australia-China trade relationship is currently under significant strain. 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