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With trade tensions deepening between the U.S. and China the foreign ministers of both China and Australia met with the aim looking to deepen their bilateral comprehensive strategic partnership leading to zero tariffs between the two nations.

Australia Metalurgical Coal Exports June 2018

The two countries are major trading partners with China relying on Australia for iron ore, coal and LNG among other commodities. China is also a leading tourist destination for the Chinese. With the recent leadership change in the LNP bringing in new Australian Prime Minister Scott Morrison the two countries have been quick to meet. Australian Foreign Minister Marise Payne is in China for the latest round of China-Australia Foreign and Strategic Dialogue with her Chinese counterpart Wang Yi. In September Australia's trade surplus jumped to $3 billion with a rise in Chinese imports odf Australian iron ore, coal and LNG a large contribtor.

Australia Iron Ore Exports

Both ministers yesterday made strong statements to promote bilateral ties on the basis of mutual trust and win-win results. The Australian government has made positive moves toward developing China-Australia relations on many occasions, Wang said. Wang also said China welcomes countries including Australia to take an active part in the cooperation under the Belt and Road Initiative.

Australia China US Tourists

Payne said a prosperous China bears positive significance to the rest of the world, and Australia does not regard China as a military threat. Exports to China from Australia and imports from China continue to hit fresh record highs in the year to September. Australia is positioned well despite heightened global trade tensions. The RBA has cautioned that the country is vulnerable if China’s economy slowed amid its battle with the Trump administration over trade protection.

 Australia’s trade story remains positive at this time with rising to correcting commodity prices and as new export capacity comes on stream in key areas such as iron ore, coal and liquefied natural gas. Exports should continue to be supported by the ramp up of LNG production. 

Australia is less directly affected by the impact of tariffs, the impact on key global trading partners and the potential dent to confidence remains a key issue. The trade spat between the U.S. and China is also clearly on the radar of the Reserve Bank of Australia.

China Natural Gas Demand Sectors

Australia is in an interesting position given its strong political and military strategic relationship with the US and trading relationship with China. The LNG industry with Australia becoming the world's largest exporter of LNG in 2019, the China becominga massive user and the U.S. looking for more export markets. Meanwhile we have an ongoing trade war beween the U.S. and China. 

Wrapping up Wang and Payne announced both sides agree to launch another round of tariff cuts starting in 2019. By that time almost all products will enjoy zero duty in bilateral trade, Wang added.

Source: HK Standard, Reuters

From a Sunburnt Country

 

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