Australia has a symbiotic relationship with China
Australia's relationship with China is a unique one, as both countries in the eyes of the other are to an extent, irreplaceable in terms of trade, especially in materials and agriculture.
With China being the world' s manufacturing capital prior to 2020, it was by far Australia's largest export partner, representing 26.4% of Australian exports, around 235 billion USD. Most of these funds were from iron ore and coal, despite both materials being available from other nations. Failures with Brazilian iron ore mines reduced iron ore supply, increasing Australian iron ore profits. Australia's coal deposits are known to be of higher yield quality than other coal mining countries, producing more energy per ton. As well as this, Australia's agricultural sector is of great interest to Chinese consumers, due to high quality produce, especially Australian baby formula which is highly popular in China.
The unprecedented effects from COVID-19 has left China persisting with their COVID Zero Policy, reducing their manufacturing output. Additionally, Australia's calls for an independent investigation on the source of COVID-19 has pushed China to place sanctions on them. These accumulated impacts of COVID-19 has fractured China and Australia's trade relationship.
However, the sale of raw materials and agricultural products to China has helped provide Australia one of the best living standards in the world. As the manufacturing capital, it is clear China was willing to pay top dollar to beat its competitors to Australia's superior materials and use them to continue their manufacturing empire. China paying this price point is reflected in the average Australian's lifestyle, where Australians have a HDI of 0.944 (8th highest in the world). Evidently, when Australia and China were trading without sanctions the results benefited both parties, yet it is also apparent that both parties are so intertwined their training will continue, regardless of sanctions. Australian materials and Chinese money are too irresistible.
To keep up with the latest finance, tech, crypto and geopolitical news, subscribe to our mailing list.
[Disclaimer: The material across our site is provided for informative purposes only and does not contain investment advice.]
Subscribe to our newsletter
Disclaimer: This article does not constitute financial advice nor a recommendation to invest in the securities listed. The information presented is intended to be of a factual nature only. Past performance is not a reliable indicator of future performance. As always, do your own research and consider seeking financial, legal and taxation advice before investing.
