Trade with China accounts for nearly a third of all Australian global trade, according to the Department of Foreign Affairs and Trade. It was worth $245 billion in 2020. Despite the strong headline figures, the trade relationship has been rocky, with unofficial trade bans placed on Australian goods coal, wine, beef, and barley as diplomatic relations deteriorated throughout the pandemic.
But there are signs some of those trade embargoes are now being lifted following Foreign Minister Penny Wong’s trip to Beijing for the 50th anniversary of Chinese-Australian diplomatic relations. Last week, three state-linked utilities and a major steelmaker were allowed to resume some coal imports from Australia.
The official figures from the Chinese government agency have been met with scepticism by economists, who believe the real figures – China’s second-weakest growth rate since the end of the Cultural Revolution in 1976 – are much worse than have been publicly revealed.
“China’s statistics bureau claims that GDP was unchanged [in the fourth quarter of 2022],” said Capital Economics senior China economist Julian Evans Pritchard.
“That is implausible, even accounting for December data showing surprising economic resilience in the face of the reopening wave of infections.”
China’s short-term threat is being exacerbated by a long-term demographic cliff that has serious implications for the Chinese economy.
The National Bureau of Statistics revealed on Tuesday that China’s population had shrunk for the first time since 1961. The mark is expected to be the first of many decreases in the Chinese population of 1.4 billion, which is expected to fall to 800 million by 2100.
Louise Loo, a senior economist at Oxford Economics said there was some good news in the data.
“There are now signs of stabilisation, as policy support doled out towards the end of 2022 is showing up in the relative resilience of infrastructure investment and credit growth,” she said.
The Australian economy grew at nearly double the rate of China’s in 2022. A surge in household spending on dining out, apparel and new cars helped drive economic growth to 5.9 per cent through the year to September, despite interest rate hikes adding pressure to mortgage repayments.
Household spending remained strong through the holiday period, jumping 11.4 per cent through the year to November according to the Australian Bureau of Statistics, but that growth is expected to slow as interest rate hikes and high inflation continue to bite. Treasury forecasts economic growth to slow to 3.25 per cent for the 2022-23 financial year, and fall to just 1.5 per cent in 2023-24.
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