Australia and China's trade balances move in opposite directions

The trade balances reported by Australia and China yesterday showed contrasting performances.

Falling exports and rising imports pushed Australia's November trade deficit up 12 percent to a worse-than-expected A$2.66 billion (US$2.04 billion) on a seasonally-adjusted basis, according to the Australian Bureau of Statistics. It was the second highest deficit on record, and follows a revised deficit of A$2.37 billion in the balance for goods and services for October.

Exports in November were particularly disappointing, falling A$50 million from October to A$12.87 billion. The strong Australian dollar was obviously a drag on export performance.

China, in contrast, posted a trade surplus of US$11.08 billion in December, its biggest in nine years. Exports in December rose 32.7 percent from a year earlier. That compared with a rise of 45.9 percent in the year through November. Imports grew 24.6 percent in the year through December, compared with November's 38.5 percent increase.

For all of 2004, China had a surplus of US$31.98 billion, compared with about US$25 billion for all of 2003.

The latest trade figures from China will surely put pressure on the country to revalue the renminbi, and possibly increase calls for protectionist measures against it in developed countries.

Just yesterday, the US-China Economic and Security Review Commission released a report which asserted that 1.5 million American jobs had been displaced over the 1989-2003 period as a result of the growing trade deficit with China, which was affecting "an ever-broadening segment of US manufacturing, including advanced technology industries like semiconductors once thought immune to lower-wage Chinese competition".

China's widening impact has been noted before. See also "China's expanding influence" and "The impact of China on the world economy".