Australia’s trade surplus in June presented better figure than prior anticipation as exports to China jumped to the second highest on record, an indication that the major commodity exporting country was steering its economy through the early tough stage of U.S.-China disputes over tariffs.
As shown in a report published recently by the Australian Bureau of Statistics (ABS), the nation’s trade surplus expanded by 158 percent to A$1.87 billion ($1.38 billion), more than double the market expectation of A$900 million and the most since May last year.
Exports saw a 2.6-percent growth on a rise in a wide variety of goods ranging from gold and iron ore to agricultural and manufactured products, according to the ABS data. In contrast, imports edged down by 0.7 percent as a retreat in crude oil overmuch offset growth in transport and telecoms equipment.
The better-than-expected surplus owed much to China as it has been sucking up Australia’s iron ore and coal output even as the trade war with the United States has become fiercer.
It was noted that a host of Australia’s exports to China are primary products used in the Asian country’s domestic market instead of re-export. The value of goods in shipment to China came in at A$10.34 billion in June, the second highest on record and surged almost 40 percent year-on-year.
“U.S. President Donald Trump would have few concerns with the U.S.-Australia trade imbalance – it is in the U.S. favor by A$18 billion over 2017/18,” said Craig James, chief economist at CommSec, one of Australia’s biggest fund management firms.
“By contrast, Australia’s trade surplus with China stands at almost A$38 billion.”
Additional Growth Impetus
Liquefied natural gas shipments to China and Japan has brought a major momentum to the surplus growth, with export proceeds increasing 14 percent in June alone to over A$4 billion.
Shipments are set to keep rising as the great Ichthys LNG Project off northern Australia has finally been commissioned after a prolonged period of delays. The $40 billion-scale project operated by Inpex Corp is the biggest overseas investment by Japanese enterprises.
One unstable factor to exports is a drought that is currently sweeping across most of crop producing areas in Australia, which may possibly damage agricultural exports later in the year.
For the second quarter of the year, Australia’s trade surplus was seen at a seasonally adjusted A$2.9 billion, down moderately from the first quarter when a strong performance in resource exports flattered the accounts.