Exports to China powering ahead

AUSTRALIA’S trade surplus blew past expectations in June as exports to China boomed to their second-highest level.

The value of exports outstripped imports by $1.87 billion in June, double the market forecast and up 160 per cent from May. It was the biggest surplus since May last year.

Exports climbed 2.6 per cent on a pick-up in iron ore and gold to farm and manufactured items, according to the Australian Bureau of Statistics.

Imports fell 0.7 per cent as a pullback in petrol outweighed strength in transport and telecoms equipment.

The windfall owed much to China, which has been hoovering up Australia’s iron ore and coal as trade tensions with the US have escalated.

China yesterday vowed not to be intimidated by “blackmail” as it considers its response to the Trump administration’s latest escalation of the trade war.

China’s foreign ministry spokesman Geng Shuang said China would “respond with countermeasures” if the US escalated the trade war.

“US pressure and blackmail won’t have an effect,” he said.

His comment came before an announcement from Washington the US is considering raising its proposed tariffs on $271 billion of Chinese goods to 25 per cent from an initially proposed 10 per cent.

Analysts noted most Australian exports to China are primary products used in their domestic economy rather than for re-export.

There is no sign of a slowdown in the growth of Chinese tourism or the flow of students from the country to Australia.

Exports of goods to China hit the second strongest level on record in June at $10.34 billion, a rise of almost 40 per cent from the same month last year.

“US President Donald Trump would have few concerns with the US-Australia trade imbalance. It is in the US favour by $18 billion over 2017-18,” noted CommSec chief economist Craig James.

“By contrast Australia’s trade surplus with China stands at almost $38 billion.”

Liquefied natural gas sales to China and Japan have been a big growth area, with export earnings up 14 per cent in June.

For the June quarter, Australia’s trade surplus came in at a seasonally adjusted $2.9 billion.