In Australia, China is taking away Mary’s little lamb


It is not news anymore that China is buying huge amount of iron ore, coal and liquefied natural gas from Australia, but what is significant is that, trade with China as the Australia’s percentage to GDP  is outnumbering any other country since the establishment of modern trade of this island country. According to an AP story, trade with china consists of 7. 7 percent of Australia’s GDP in 2011, leaving Japan’s trade with Australia in the shadow with an average of 6.4 percent of GDP in the 1980s, and even topping its peak of 7.4 percent in 1985.

You might wonder about the Great Britain. Well, before the 1950s free-trade era, Great Britain was for sure Australia’s No.1 trading partner because of the special favorable trading policies toward the Great Britain. However, since then, with the UK’s economy in the mud and the huge demand from China, Australia’s affectionate tale with the Queen has been long left in dust.

Here is a graph breaking down top ten exports markets for Australia in 2011, and the second graph shows, up to 2009, how China is climbing to become the No.1 trading partner of Australia.

Source: Australian Department of Foreign Affairs and Trade

Source: Australian Department of Foreign Affairs and Trade

australia export

One of the results from such large amount of trade is the appreciation of the Australian dollar. The logic behind it is that the increasing in trade and financial flows have made the Australian dollar more desirable, thus increasing the “price” of the currency, which results in the appreciation. Here is a chart showing the increasing pattern of the U.S. dollars that one Australian dollar could exchange over the years. Despite the swift depreciation of the Australian dollar during the global financial crisis, Australia managed to skip the recession due to the large energy demand from China.

The coal and ore have to come from somewhere, with limited traditional coal mining sites, the focus is zooming in on Australia’s vast stretches of farming land. Big coal companies, such as the Rio Tinto, have been snatching land in the recent decade to meet the appetite of the Asian market, Chinese companies have gone on land purchasing spree for coal mining purposes. One of the Chinese companies that has been in spot light is the Shenhua Group, one of the world’s largest coal miner. Shenhua has been known to offer farmers money several times of the land’s market value in order to secure purchases. According to The Australian, Shenhua paid $5.2m to a farmer for a house on four lots of land totalling 594ha in Duddy Road, Breeza in 2010 — a property that last sold in 2002 for $376,000.

Of course, not everyone is happy. Some local farmers refused such offers and many activist groups take their initiatives to the public as well. For example, here is an activist group’s website (Australia page) against land grabbing and related food crisis.


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