Booming sales of iron ore and coal to China helped deliver the first trade surplus since 2011 over the past year as exports surged by 17 per cent while the nation’s appetite for imports barely changed.
China took a record 33 per cent of Australia’s exported goods over 2016-17, while Chinese students and tourists also helped to boost exports of services.
Australia’s exports had hovered at around $315 billion for the previous four years, showing no growth trend, but they reached a record $366bn last year, which was sufficient to deliver a surplus of $12.7bn. Imports rose by only 1.6 per cent to $353bn, reflecting weak demand from consumers and softer prices for oil imports.
The trade figures show that although the construction phase of the resources boom is now almost complete, imports of capital goods and machinery are still entering at an elevated rate, rising 6.3 per cent to $67.8bn last year, the highest since 2012.
Exports of goods to China leapt by 27.4 per cent, from $74.8bn to $95.4bn, boosted by the surprise rise in prices for coal and iron ore late last year. Although prices came off in May and June, they have rallied again since the end of the financial year in response to a strong performance by China’s steel industry.
China is by far the largest market, taking more than double that of next-ranked Japan. India, however, has emerged as Australia’s fastest growing export market. It overtook the US to become Australia’s fourth biggest market for goods last year, just behind Korea, with exports soaring 54.7 per cent to $14.9bn.
The US was one of the few markets where Australian sales fell. A 9.5 per cent drop to $11.9bn was the weakest result in four years. The US, which was Australia’s second most important export market until 2004, when the Australia-US Free Trade Agreement was completed, is now ranked only sixth, having also been overtaken by Korea and Hong Kong.
Farm exports had a reasonable year, with exports rising by 7.1 per cent while exports of manufactured goods were down 1 per cent.
Australia’s exports of services are also showing strong growth, led by education. Foreign students delivered $24bn to Australia’s export revenue, an 18.5 per cent increase on 2015-16.
Australian Bureau of Statistics figures show that overseas students spent $23.5bn on costs of living, such as accommodation, fees, food and entertainment, and $656m on other services.
Economist Saul Eslake, a vice-chancellor’s fellow at the University of Tasmania, said the numbers were impressive but warned that the lure of revenue from international students put pressure on domestic student places in revenue-poor universities.
“You would want to be confident that they aren’t squeezing local students out of a university place,” Mr Eslake said. “And in terms of the longer-term sustainability of the industry, you would want to be sure that the education they are getting is regarded as good quality.” He noted a collapse in demand, especially from India, in 2009 after a spate of dodgy private colleges collapsed and the Australian dollar hit $US1.10.
Education Minister Simon Birmingham said the vibrancy of the international student sector was a testament to Australia’s reputation. “International student numbers are up 14 per cent on last year and while the sector supports more than 130,000 jobs in Australia and delivers billions of dollars to our economy, what’s even more important are the global knowledge connections the sector fosters,” Mr Birmingham said.
By DAVID UREN