Country’s trade surplus higher than expected as exports to China boom
Australia’s trade surplus in June was higher than expected as exports to China boomed to their second highest on record, a sign the commodity-leveraged country was weathering the early stages of the tariff dispute between Beijing and Washington.
A report on Thursday from the Australian Bureau of Statistics showed Australia’s trade surplus rose by 158 per cent to A$1.87 billion (US$1.39 billion), twice the forecast and the largest since May last year.
Exports rose 2.6 per cent on a pickup in a broad range of goods from iron ore and gold to farm and manufactured items, the data showed. Imports fell 0.7 per cent as lower purchases of petrol outweighed an increase in transport and telecoms equipment.
The windfall owed much to China, which has been hoovering up Australia’s iron ore and coal output even as trade tensions with the United States have escalated.
Analysts said that much of Australia’s exports to China are primary products used in the Asian nation’s domestic economy rather than for re-export. There has also been no sign of a slowdown in the rapid growth of Chinese tourism or the flow of students from the country.
Indeed, exports of goods to China hit the second strongest on record in June at A$10.34 billion, an increase of almost 40 per cent from the same month last year.
Sales of liquefied natural gas to China and Japan have been a major growth area, with export earnings up 14 per cent in June alone at just over A$4 billion.
One risk to exports is a drought currently ravaging large parts of the farm belt in Australia, which is likely to cut agricultural shipments later in the year.
But in the US, Soren Schroder, chief executive of Bunge Ltd, the world’s biggest oilseed processor, said American farmers could not expect soybean demand from other countries to fill the void created by China if the trade war between the countries persisted.
Last month, China imposed 25 per cent tariffs on American soybeans and also targeted other farm goods in retaliation for US duties on imports of steel and aluminium. China is instead splurging on soybeans from South America.
“That will clearly be a significant change,” Schroder said. “China in a normal year would take over 20 million tonnes of US soybeans in the fourth and first quarter. That will be a hole in US exports that will be difficult to fill with other business.
“I don’t think it is likely that others can make up for the shortfall that China will have if they don’t come back to the US market.”
China was currently using supplies bought from Brazil, and “unless there’s a resolution, they will continue to buy those beans in Brazil as opposed to the US,” Schroder said.Source: www.scmp.com