Ask Fear & Greed: How reliant are we on China?

With Anthony Albanese in China meeting President Xi Jinping, I wanted to ask: How reliant are we on China?

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Episode Transcript

Speaker 1 (00:03):
Welcome to Ask Fear and Greed, where we answer questions
about business, investing, economics, politics and more. I'm Adam Lang
and hello Sean Almer.

Speaker 2 (00:11):
Hello Adam Lang or Shawn.

Speaker 1 (00:13):
Today's question with Prime Minister Anthony Alberanezi in China meeting
President Jijingping. How reliant do you think we are on China?

Speaker 2 (00:22):
Very very very very very reliant A lot, and that's
us Fear and Greed for the day. Move on now.
I did some research on this one because there's numbers
and then there's culture. So China is Australia's largest training partner.
It buys almost a third of all Australian exports. That's

(00:45):
about three hundred billion dollars worth of value. It is
the top overseas market for many Australian goods and services.
We talk about iron ore, gold is another one. Education
services I think fits in there. Yeah, it's massive, definitely.
While resources and energy make up the largest share. It

(01:07):
is changing because as the Chinese economy develops and consumption
habits of the middle class change, we're seeing growth in
other things like premium agricultural exports. The great example is
Penfolds wine. So when Beijing put prohibitive tariffs on Australian wine.

(01:28):
We stopped selling effectively, Treasury wine estates, signes, Penfiles stopped
selling to China. They came off. Those sales have rebounded
hugely and Penfolds has been Treasury win estates, but the
Penfold brand is what's been sold and Chinese like buying
expensive Australian wine. There's also stuff like finance, health, aged care,

(01:52):
professional services. We are increasingly exporting those sorts of products
to China. Yeah, so that's kind of the trade side.
There's also the foreign investment side. China is a really
important source of foreign investment in Australia. Chinese money by

(02:13):
assets here. Now it is controversial and you know, the
least on the Port of Darwin, particularly controversial at the.

Speaker 1 (02:20):
Belton Road initiative as it was called for some time.

Speaker 2 (02:23):
Yeah, yeah, that, but just take a step below that. Sure,
and there's a lot of Chinese money coming into Australia,
which is a great thing. You know, it's got nothing
to do with the Chinese government.

Speaker 1 (02:35):
Yep.

Speaker 2 (02:37):
China's Australia's thirteenth largest investor, invest about seventy three billion
dollars last year. When that happens you've got more money
flowing gress, you get greater infrastructure that actually improves productivity.
It creates jobs for Australians. And that's the that's according
to the Department of Foreign Fairs and Trade. That's not
me saying it, that's defact saying that. So it's a

(02:57):
really good thing. Australian bususinesses are increasingly choosing to enter
the Chinese market with success, so banking wealth management, some
of our wealth managers have done really well investing directly
into China. We also have increasingly a bunch of common
interests in multilateral and regional forums. So we're both part

(03:20):
of the G twenty for example, we're both part of
the Asia Pacific Economic Cooperation Unit. We have a free
trade agreement that augments the high level by lateral mechanisms
already in place between the two countries. Now Xijing Ping
Anthony Aberzi, we're talking yesterday saying we need to ensure
that we keep these things in place. And was they

(03:42):
didn't talk Donald Trump's name wasn't mentioned at least officially
as far as we know, and to talk about the
US putting pressure on Australia. But what they were talking
about is just push through all that noise and actually
remain at least trading friends. There's that, Then there's the
other one, which I like to think about, it's the intangibles.

(04:06):
So it's culture, you know, it's food, it's lifestyle. So
the university I went to, and this is many years ago,
admittedly had a large number of Chinese students and it
just was a richer university as a result of it. Now,
I'd imagine that's even more so today because I'm sure

(04:28):
there's many more Chinese students and international students. More generally,
you just end up with a richer society. And I'm
I'm a huge like I'm not a fan of borders,
to be perfectly honest, I'm a huge fan of people
being able to migrate across countries, and particularly people who
are less privileged than we are. But I just think

(04:51):
that we totally rely financially on China, but there's a
bunch of other things that we really rely on them
on them for as well.

Speaker 1 (05:00):
That's really interesting. So they buy a third of our stuff,
a third of our exports. They're the thirteenth largest investor
in Australia, and there's many more benefits than that.

Speaker 2 (05:10):
Yeah, absolutely so. I mean, Haroline, are we on them?
Very very very If you know all the discussion about tariff's,
will they affect Australia out well, most of the experts say, well,
not really directly, but indirectly. If China gets hit, that'll
slay China. Now that hurts us, so we you know,
our economy is so tired to China more than any
other country in the world.

Speaker 1 (05:30):
That's great. Thank you very much, Sean.

Speaker 2 (05:32):
Thanks Adam.

Speaker 1 (05:33):
If you have your own question for Fear and Greed,
jump onto the website Fearangreed dot com dot au or
send it through on any of our social media platforms.
I'm Adam Lange and this is us Fear and Greed.
Have a great day.