June 17, 2025 • 5 mins
Why are we so tied to the Chinese economy?
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Episode Transcript
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Speaker 1 (00:03):
Welcome to ask fear and greed when we answer questions
about business, investing, economics, politics and more. I'm Michael Thompson
and Hello, Sean Aylmer.
Speaker 2 (00:11):
Hello Michael.
Speaker 1 (00:12):
Sean this question today, I'm just jumping straight into it,
no preamble, nothing else. It's got a bit to it.
Why are we so tied to the Chinese economy? So
I'm talking the Australian economy. I'm talking Australian companies, kind
of resource companies, all of these ones that seem to
(00:33):
be so heavily reliant on what happens in China. Whenever
there's any data that comes out of China, we pay
a lot of attention to it. Why are we so
tired to the Chinese economy?
Speaker 2 (00:44):
So, I mean, I suppose, now that you've asked the
way you're asking this question, I'm thinking, I mean, it's
sort of obvious why we are in one sense, But
then I'm thinking maybe we overdo it because China's about
a third of our exports, and iron ore and gas
are the big two, and you know it's like two
hundred billion, more than two hundred billion a year that
(01:07):
we send over there. So thirty two percent is a
big amount. And say, if the Chinese economy i't always
used to make steel, if China's not building roads and
bridges and they're not building new homes that need roads
and bridges, that feeds through to Australia, and that's exactly
what's happened in the last little bit. That's why iron
ore prices are about ninety three dollars a ton rather
than one hundred and ten dollars a ton. So that's
(01:30):
we sell a lot. But there's actually a lot of
other countries that we sell a lot of stuff too.
So Japan it's twelve percent of our experts sports. We
have a free trade deal with Japan like we do
with China. Coal is what we sell mostly to Japan.
That's pretty significant. Korea in the US sort of six
(01:52):
percent of our exports. So you know, if you if
you put Japan, Korea, United States, India in there, you're
not that far behind what we sell to China. Now,
some of these economies like India are really interesting because
it's not necessarily hard commodities. It's more like education services.
Speaker 1 (02:13):
Okay, so.
Speaker 2 (02:15):
It's a really important you know, iron or coal, natural gas, gold, beef,
all those things we know about to a lesser extent, wheat, copper, aluminum,
that sort of stuff right up there, those education services,
So all those kids that come to Australia and study here,
that's actually an export that we are that's counted as
(02:39):
an export. So all those foreign students. So I'm going
around in circles here. But China is all important, takes
thirty two percent of our exports, but we sort of
probably overstate it in a way because India is super important,
Korea is super important, Japan super important.
Speaker 1 (02:57):
Okay. Is it also the fact that we perhaps over
state China because they are so vital to the rest
of the world as well in terms of their role
in exporting, exporting manufactured goods, etc. In that country, and
so we are very much dependent on what's happening within
the country output from factories, et cetera, that that really
(03:17):
matters to the rest of the global economy.
Speaker 2 (03:20):
Yeah, definitely, So places like even if we just stay
in our region, if China suffers, countries like Korea, even
Japan to some extent sort of Singapore is a big
export partner of ours, Indonesia, New Zealand, they all struggle,
and so if they're struggling, they're not going to buy
(03:41):
as much from US as well, So there's that indirect
effect from China. But having said that, the US is
a very big player and that India is a very
big player as well. But it's a fair point.
Speaker 1 (03:54):
And so just then in terms of the companies I
suppose that are so directly tied to the Chinese economy,
you're really looking at the big miners, right, like BHP Rio.
These are the ones that are exporting all the iron
ore over there. They are the ones that are going
to be hit hardest by a downturn in China, right Yeah.
Speaker 2 (04:12):
And BHP Rio fortesqu Medals they're the company. So BHP
share price is down about twelve percent over the last
over the last year or so, ford Skew's down thirty
two percent, okay, and then Rea is off about ten
nine or ten percent. I think they're the stocks that
really depend on iron ore primarily. That's why Fordes Skew's
off so much, because it is an iron ore company.
(04:33):
At least BHP and REO have other stuff that they
send over to China and around the world. So yeah,
the big miners are the ones who have certainly been
hit hardest.
Speaker 1 (04:43):
Okay, that's a fascinating space to consider, and I suspect
you could break down any one of those elements to
look at further in terms of the resource companies or
the property sector over there, because there's there's plenty in it.
I think we've done enough for today, and I think
we've answered some version of the question that I asked.
I don't know if we as we actually answered the
(05:04):
specific questions, but we've answered something, Sean, and that today
will be enough. Thanks very much, Sean.
Speaker 2 (05:10):
Thank you, Michael.
Speaker 1 (05:11):
If you have your own question that you would like
us to well and truly mangle, and please send it
on through via the website fearangreed dot com dot au,
or go to any of the social media platforms that
we use LinkedIn, Facebook, Instagram and send you a question
on through to us and we will get to it
very very soon. I'm Michael Thompson and this is Ask
Fear and Greet
Welcome to ask fear and greed when we answer questions
about business, investing, economics, politics and more. I'm Michael Thompson
and Hello, Sean Aylmer.
Speaker 2 (00:11):
Hello Michael.
Speaker 1 (00:12):
Sean this question today, I'm just jumping straight into it,
no preamble, nothing else. It's got a bit to it.
Why are we so tied to the Chinese economy? So
I'm talking the Australian economy. I'm talking Australian companies, kind
of resource companies, all of these ones that seem to
(00:33):
be so heavily reliant on what happens in China. Whenever
there's any data that comes out of China, we pay
a lot of attention to it. Why are we so
tired to the Chinese economy?
Speaker 2 (00:44):
So, I mean, I suppose, now that you've asked the
way you're asking this question, I'm thinking, I mean, it's
sort of obvious why we are in one sense, But
then I'm thinking maybe we overdo it because China's about
a third of our exports, and iron ore and gas
are the big two, and you know it's like two
hundred billion, more than two hundred billion a year that
(01:07):
we send over there. So thirty two percent is a
big amount. And say, if the Chinese economy i't always
used to make steel, if China's not building roads and
bridges and they're not building new homes that need roads
and bridges, that feeds through to Australia, and that's exactly
what's happened in the last little bit. That's why iron
ore prices are about ninety three dollars a ton rather
than one hundred and ten dollars a ton. So that's
(01:30):
we sell a lot. But there's actually a lot of
other countries that we sell a lot of stuff too.
So Japan it's twelve percent of our experts sports. We
have a free trade deal with Japan like we do
with China. Coal is what we sell mostly to Japan.
That's pretty significant. Korea in the US sort of six
(01:52):
percent of our exports. So you know, if you if
you put Japan, Korea, United States, India in there, you're
not that far behind what we sell to China. Now,
some of these economies like India are really interesting because
it's not necessarily hard commodities. It's more like education services.
Speaker 1 (02:13):
Okay, so.
Speaker 2 (02:15):
It's a really important you know, iron or coal, natural gas, gold, beef,
all those things we know about to a lesser extent, wheat, copper, aluminum,
that sort of stuff right up there, those education services,
So all those kids that come to Australia and study here,
that's actually an export that we are that's counted as
(02:39):
an export. So all those foreign students. So I'm going
around in circles here. But China is all important, takes
thirty two percent of our exports, but we sort of
probably overstate it in a way because India is super important,
Korea is super important, Japan super important.
Speaker 1 (02:57):
Okay. Is it also the fact that we perhaps over
state China because they are so vital to the rest
of the world as well in terms of their role
in exporting, exporting manufactured goods, etc. In that country, and
so we are very much dependent on what's happening within
the country output from factories, et cetera, that that really
(03:17):
matters to the rest of the global economy.
Speaker 2 (03:20):
Yeah, definitely, So places like even if we just stay
in our region, if China suffers, countries like Korea, even
Japan to some extent sort of Singapore is a big
export partner of ours, Indonesia, New Zealand, they all struggle,
and so if they're struggling, they're not going to buy
(03:41):
as much from US as well, So there's that indirect
effect from China. But having said that, the US is
a very big player and that India is a very
big player as well. But it's a fair point.
Speaker 1 (03:54):
And so just then in terms of the companies I
suppose that are so directly tied to the Chinese economy,
you're really looking at the big miners, right, like BHP Rio.
These are the ones that are exporting all the iron
ore over there. They are the ones that are going
to be hit hardest by a downturn in China, right Yeah.
Speaker 2 (04:12):
And BHP Rio fortesqu Medals they're the company. So BHP
share price is down about twelve percent over the last
over the last year or so, ford Skew's down thirty
two percent, okay, and then Rea is off about ten
nine or ten percent. I think they're the stocks that
really depend on iron ore primarily. That's why Fordes Skew's
off so much, because it is an iron ore company.
(04:33):
At least BHP and REO have other stuff that they
send over to China and around the world. So yeah,
the big miners are the ones who have certainly been
hit hardest.
Speaker 1 (04:43):
Okay, that's a fascinating space to consider, and I suspect
you could break down any one of those elements to
look at further in terms of the resource companies or
the property sector over there, because there's there's plenty in it.
I think we've done enough for today, and I think
we've answered some version of the question that I asked.
I don't know if we as we actually answered the
(05:04):
specific questions, but we've answered something, Sean, and that today
will be enough. Thanks very much, Sean.
Speaker 2 (05:10):
Thank you, Michael.
Speaker 1 (05:11):
If you have your own question that you would like
us to well and truly mangle, and please send it
on through via the website fearangreed dot com dot au,
or go to any of the social media platforms that
we use LinkedIn, Facebook, Instagram and send you a question
on through to us and we will get to it
very very soon. I'm Michael Thompson and this is Ask
Fear and Greet
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