China overtook Japan to become Australia’s No. 1 export destination in 2009 and the two-way trade totalled more than $140b in 2016. Bulk commodities—iron ores and concentrates, coal and gold — are the chief exports, but Australia’s 45,000 exporters are also gaining traction in agriculture (e.g. milk and live cattle) and services (e.g. aged care and education).
China’s rebalancing toward a more consumer-oriented economy and rising middle class is weighing heavily on hard commodity producers, but the transition will support Australian agricultural and service exports. Indeed, the surge in Australia’s exports of both farm products and services over the last three years is a good barometer of Chinese rebalancing.
China is also Australia’s second largest source of visitor arrivals and its largest source of foreign students. Chinese visitors hit 1.2m in 2016—behind only New Zealand. The number of students topped 196,000 in 2016 (ahead of India, Korea, Thailand and Vietnam with combined enrolments of 169,000).
Sino-Australian investment relations lag behind trade, tourism and education. Nevertheless, the ties are thickening fast. In terms of foreign investment stocks, China ranks only 7th as an investor in Australia, owning a portfolio of just A$87b in 2016. This is well behind the No. 1 investor, the US, with A$861b, and the UK with A$515b. But China is rising through the ranks as its stock of investment has risen 14-fold since 2007.
The story is similar for Australian investment into China; smallish stock, but large and growing flows, expanding the stock quickly. The stock of Australia’s investment in China reached $87b in 2016. The US ($617b) and UK ($350b) remain the leading destinations for Australia’s foreign investment.