Australia’s free-trade agreements with nations other than China have delivered diversification in neither exports nor imports over the past decade, leaving Australia more tightly bound by trade to China than any other advanced nation.

While trading partners, led by Japan, Taiwan and South Korea, did help Australia to endure a three-year Chinese assault on its exports, which began in 2020, their shares of Australian exports contracted once China dropped its discriminatory bans.

It is too soon to say how the Trump administration’s tariff strategy will reshape global trading relationships, but its expressed preference for trade partners to isolate supply chains from China would be hard for Australia to accommodate.

China (including Hong Kong) bought 36.9 percent of Australia’s goods exports last year and delivered 25.8 percent of our imports, putting its share far above global averages.

China took only 11.1 percent of the rest of the world’s exports in 2023 while it provided 16.7 percent of the rest of the world’s imports.

The Trump administration has been railing against China’s share of US trade however it accounted for just 14.8 percent of its imports and 7.7 percent of its exports.

China’s out-sized share of Australia’s exports is the obvious result of the resource sector, which has provided the lion’s share of the iron ore, coal, bauxite and other minerals from which China’s mega-cities, infrastructure and manufacturing plant have been built.

Australia was China’s third largest supplier of goods behind South Korea and the United States in 2023, although it was likely pushed into fourth place by Russia in 2024.

The strength of Australia’s resource sector drained capital and labour away from its manufacturing, which has been contracting since 2008. An increasing share of manufactured goods consumed in Australia has been imported, with a third coming from China.

As efforts to upgrade the World Trade Organisation faltered after the global financial crisis, the Abbott government sought to forge new bilateral and regional trade agreements. Australia now has deals with the United States, China, Japan, Singapore, South Korea, Thailand, Indonesia, Malaysia, India and Britain, as well as with ASEAN and two broad Asia-Pacific agreements.

Australian businesses have benefited from the reduced tariffs and trade-related red tape resulting from these deals, but they have not materially affected the direction of Australian trade.

Between 2014 and 2024, the share of Australia’s exports going to bilateral free-trade partners, other than China, dropped from 47.6 percent to 44.3 percent.  The  share going to China rose from 34.8 percent to 36.8 percent in that time. China’s share of exports peaked above 40 percent between 2019 and 2021, then plunged to 30 percent in 2022 during its trade strikes, before recovering.

Source: DFAT trade statistics.

Since the Japan-Australia Economic Partnership Agreement entered force at the beginning of 2015, Japan’s share of Australia’s exports has dropped from 18.1 percent to 13.6 percent. Japan was nevertheless a valuable aid during China’s trade boycotts. Its share of Australia’s exports rose from12.2 percent in 2020 to reach 19.9 percent by 2022 before dropping back again as exports to China recovered. There was a similar trend in exports to Korea and Taiwan.

On the import side, Australia’s free trade partner share changed little from 44.5 percent in 2014 to 43.8 percent a decade later. China’s share of Australia’s imports has risen sharply from 20.1 percent to 25.8 percent in that time.

According to the Financial Times, the preliminary trade deal between the United States and Britain announced last week aims to exclude China from the supply chains of British exports to the US.

Relief from US tariffs on steel, pharmaceuticals and other, yet to be specified, sectors was conditional on Britain accepting US requirements on supply chain security and ‘ownership of relevant production facilities’, effectively shutting out China. The newspaper said this was to be a template for agreements with other countries.

After plans for such supply chain restrictions were first aired in mid-April, China’s commerce ministry warned it would ‘resolutely take countermeasures’ against any country reaching a deal with the US at the expense of Chinese interests.

The US accounts for only 4.6 percent of Australia’s exports (and 11.8 percent of goods imports), but it is a significant buyer of Australian pharmaceuticals, medical instruments, aircraft parts and measuring instruments. Sales of pharmaceuticals to the US have risen from $200 million to $2.2 billion over the past decade. Disentangling Chinese manufacturers from Australian supply lines would be difficult.

Former treasurer Joe Hockey records in his memoir that in 2015, as the relationship between the US and China was deteriorating, President Barack Obama asked Australia’s Prime Minister Tony Abbott to stop selling iron ore to China. ‘Both the prime minister and I were astounded,’ he said, adding that the Chinese sales were critical to both the economy and the federal and West Australian budgets.

Australia may face renewed calls from the US to divert its Chinese trade, but no policy has ever been articulated that would achieve this.