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Abstract

This article highlights trends in the comparative value of Australia’s merchandise trade with China and considers the relative importance of Australia for China’s international merchandise trade and vice versa. The composition of the merchandise trade between Australia and China is also examined. Trade in services between Australia and China is of increasing importance and its composition and balance is discussed. As a result of global economic reforms, international mobility of capital has increased. China has become the world’s major destination for foreign direct investment (FDI) and is now itself an important source of FDI. However, Australia is not a major investor in China nor a major outlet for China’s FDI. Reasons for this, and for the other features observed in economic and business relations between Australia and China, are outlined. Prospects are explored for future economic relations between Australia and China, particularly in the light of a proposed Australia-China Free Trade Agreement.

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