Daily Archives: May 24, 2013

China and Australia: the coal and iron trade

Western Australia iron ore mining. Image from wikipedia

China’s demand for iron and coal has helped to turn it into Australia’s biggest trading partner and to keep Australia more economically robust than most other rich countries. But in some parts of the country the new relationship with China came as a reminder of the unwelcome side-effects of the boom… Chinese trade not only helped Australia survive the global downturn. It has also boosted the currency’s strength, and made it harder for manufacturers to find markets for their exports. The problem is unevenly distributed around the country. South Australia has suffered the greatest pain: in no other state does manufacturing account for such a big share of the economy…. Five years ago, Mitsubishi closed its plant in Adelaide. Australia’s remaining carmakers, Holden, Ford and Toyota, have shed jobs steadily since then. Australians are buying imported cars more cheaply than ever, especially from Japan; their dollar has risen by 26% against the yen since October.  Even wine, South Australia’s third-biggest export, has suffered: exports in fiscal 2012 dropped in value by A$62m ($65m), or 2%. Codan, an electronics company based in Adelaide, has done better. By making many high-tech products in Malaysia, it has been able to protect itself from the strong Aussie dollar.

The Australian dollar: Resources boomerang, Economist, Apr. 20, 2013, at 44