Trade Between Australia and China

Topics: International trade, China, Southeast Asia Pages: 6 (2008 words) Published: April 15, 2009
Many products we use today are made in China. Trade between Australia and China has heightened in the last couple of years. China has one of the world’s largest economies. It has an increasing role in shaping the world economy, accounting for a third of the increase in the world’s gross domestic product and imports for the period 2000 to 2003 (The Economist 2004). It is also home to a population of 1.3 billion inhabitants, consuming a variety of goods from food items to luxury commodities, toys, clothing, gifts, most car parts and many more things Australia benefits from. For non-agricultural goods, Australian import tariffs are generally low. The most notable exceptions are on motor vehicles and textiles, clothing and footwear imports. However, Australia has undertaken to unilaterally reduce these tariffs over time, with tariffs on motor vehicles, textiles and footwear scheduled to decline to 5 per cent by 2010, while tariffs on clothing will be reduced to 10 per cent by 2010 and to 5 per cent by 2015. Product safety and quality are serious matters to australia, that must be addressed quickly and transparently to maintain consumer confidence. It is important to pursue a fact-based assessment of the issue to ensure accurate understanding of the problems and address them with the appropriate solutions. Most of these problems include, the safety of the workers in china and the heatlh issues raised about the cheap chinese goods that come from china to australia. .

Australia has good political and economic relations with both China and Japan, neither of which wish to exclude Australia from a regional trading community. In most cases, Australian Companies do not own these factories. Australian and multinational companies pay the factories to make products for Australia. From tiny boutiques to multinational corporations such as ford motor, companies compete in the global marketplace by reducing costs -- and that usually means outsourcing manufacturing to China. Since the implementation of the "reform and opening-up" policy in 1978, China's economy has been undergoing a rapid and healthy development. Over the past 27 years, China's annual GDP growth has averaged 9.4 per cent, more than doubled that of the world as well as more than two folds that of the developed nations over the same period. In 2004, China's GDP reached USD1650billion, an increase of 9.5 per cent over 2003.(The Embassy of the People's Republic of China in Australia, June 2005)

Last year Australia imported $287.8 billion in goods from China, up from $51.5 billion a decade ago, according to the Australian Commerce Department (Asia Education, The University of Melbourne 2005). Although Australia is importing its many goods from china and reducing the cost, Australia also have to consider the unemployment rate and safety issues with these imported goods from Asia.

China is one of the biggest countries along with Thailand and Japan who make goods for Australia. Being Australia’s third largest merchandise trading partner and seventh largest service export market in 2003, China might significantly affect the Australian economy through any changes made to its trade policies. A more liberal Chinese trade policy could increase Australia’s income in part through greater market access for its exports. Of every hundred dollars of national income in Australia, thirteen dollars are provided by exports to East Asia. Australian exports to East Asia have been growing faster than Australian exports generally, and they are not just raw materials. East Asia is also a major market for Australian manufactures and Australian services (D. Uren, The Australian News, 2008).

Australia’s total bilateral merchandise trade with China grew from AUS$10.1 billion in 1998-99 to AUS$22.6 billion in 2002-03, an average annual growth of 22 per cent (DFAT 2004). For the same period, Australia’s total merchandise exports to China rose from AUS$3.9 billion to AUS$8.8 billion while its...

References: • Anderson, K. 1995, ‘Australia’s changing trade pattern and growth performance’, in R. Pomfret (Ed), Australia’s Trade Policies, Oxford University Press Melbourne.
• Asia Education, 2005 ‘Australia’s Trade Links with Asia’, The University of Melbourne.
• Baier, S.L. and Bergstrand, J.H. 2004, ‘Economic determinants of free trade agreements’, Journal of International Economics, vol. 64, no. 1, pp. 29 ' ' 63.
• Balassa, B. 1965, ‘Trade liberalization and ‘revealed’ comparative advantage’, Manchester School of Economics and Social Studies, vol. 33, no. 1, pp. 92 ' ' 123.
• Buetre, B.L. and Ahmadi-Esfahani, F.Z. 2000, ‘Updating an input ' ' output table for use in policy analysis’, Australian Journal of Agricultural and Resource Economics, vol. 44, no. 4, pp. 30 ' ' 42.
• Business Day, 2006, Cheap buys can trash Australia
• Fitzgerald, S. 1997, Is Australia an Asian country? Can Australia survive in an East Asian future? Sydney: Allen and Unwind.
• Milner, A. and M. Quality (eds.) 1998, Australia in Asia: Episodes, Melbourne: OUP
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