Australia’s trade surplus shrank to $4.6 billion in July as the ongoing political spat with China took its toll.
Figures released by the Australian Bureau of Statistics on Thursday showed a $3.5 billion plunge in the trade surplus, which is the balance of exports exceeding imports.
Exports fell 4 per cent while imports rose 7 per cent.
Rural exports had the biggest monthly decline since January 1983, falling by 15.1 per cent, down $539 million.
CommSec senior economist Ryan Felsman suggested the escalating political dispute between Australia and China — which has seen our largest trading partner impose tariffs, duties and anti-dumping measures on wine, barley and beef exports — was starting to bite.
Cereal and grains exports plunged 38.2 per cent, meat exports were down 9.7 per cent and exports of other rural goods slid 13.8 per cent.
“Not good news for our farmers hit by bushfires, drought and COVID-19 restrictions,” Mr Felsman said.
“That said, exports to our biggest political ally, the US, hit record highs on a rolling annual basis in July at $18.7 billion.”
The latest development in Australia’s increasingly tense relationship with China came this week when the Asian superpower suspended barley imports from Perth-based CBH, the nation’s largest grain exporter, over claims shipments had contained excessive levels of weed seeds — an allegation the company rejects.
The ABS figures also show consumer imports increased 7.4 per cent, which Mr Felsman said was encouraging as the economy reopened and domestic demand recovered from the impact of the COVID-19 pandemic.
He said the overall trade surplus was “decent” and expected to improve with iron ore prices continuing to lift in August.
Exports of the steelmaking commodity accounted for 56 per cent of all Australian goods exported to China in 2019-20.
Originally published as China trade war hitting us where it hurts