Australia’s trade with China: What is too much of a good thing?

This article appeared in Asialink Insights on November 11 2026.

Before Prime Minister Anthony Albanese arrives in China to attend the APEC Economic Leaders’ meeting on 18-19 November, the Australian government needs to update its trade talking points.

Last week, Assistant Minister for Foreign Affairs and Trade Matt Thistlethwaite led a business delegation to the China International Import Expo in Shanghai where he touted a two-way trade relationship worth $326 billion.

That might have been what it was worth in 2025.

But with the annual Australia-China Leaders’ meeting expected to be held on APEC’s sidelines, the figure Albanese should have on the tip of his tongue is $355 billion.

According to the Australian Bureau of Statistics, this was the value of two-way trade in the 12 months through to September.

Trade Minister Don Farrell might be feeling a quiet sense of satisfaction. In early 2024 he remarked that, “Just because we’re doing $300 billion worth of two-way trade at the moment doesn’t mean that figure can’t be $400 billion”.

Given that Australian businesses had still not been entirely freed of the trade restrictions that Beijing had imposed in 2020, and the total value of Australia’s goods exports to China had fallen during 2024 and into 2025, in some quarters Farrell’s optimism was met with scepticism bordering on derision.

Earlier this month Farrell continued to insist that “we can do more with China”– and the latest trade data show he’s got a point.

The fall in total export value a couple years ago was almost entirely an iron ore price story – and entirely unsurprising. It was never realistic that the price would remain above $US120 per tonne as it often was during 2021-23. And even with the price between $US80-$100 as it currently is, local miners still enjoy healthy margins.

Meanwhile, the volume of iron ore that Australia shipped to China over the past 12 months has never been higher: 821 million tonnes, up four percent on a year earlier.

The value of Australia’s agriculture, forestry and fisheries exports to China are also at record highs. So too are services.

But the big recent gain has been in the value of Australia’s goods imports from China, which now stand at $137 billion, and up 16 percent over the past year.

In early 2026, China overtook Japan to become Australia’s largest supplier of passenger vehicles, a distinction the latter had held for three decades.

Still, despite the import surge, Australia maintains a $60 billion-plus bilateral trade surplus.

Critics of Australia’s trade exposure to China may lament that many of the sectors hit with disruption in 2020 have rushed back in.

Today, 79 percent of Australia’s barley exports are sold to China. This is up from the 57 percent share that prevailed before Beijing imposed trade-ending tariffs in May 2020 and which were not removed until August 2023.

But this is not evidence that local growers are naïve about geopolitical risk. Rather, it demonstrates their confidence in an ability to manage it. When access to China was lost, they quickly pivoted to alternative markets with only limited impact on prices. With access restored, there is no sensible reason why they should not now seek out the highest prices available.

Rock lobster fishers, on the other hand, were hit harder and have reduced their exposure to China from 96 percent of total exports to 79 percent. The latest figure might strike some as still being too high. But with China accounting for 93 percent of global imports, further cutting sales to China would be an act of pre-emptive and potentially needless self-harm.

Yet for all the scale and resilience of the Australia-China trade relationship, there are serious challenges that Albanese might raise when speaking to his Chinese counterpart.

These are quite apart from pure economic developments, such as a long-expected and gradual decline in China’s demand for iron ore as its industrialisation matures.

Beijing’s formation of a central purchasing agency for iron ore, which since 2025 has targeted Australian sellers one by one for concessions, deserves specific attention. If Canberra were to allow Australian sellers to merge or orchestrate the formation of a sellers collective as some commentators have encouraged, Beijing would be quick to complain the “principles of market economy, fair competition and free trade” were being abused.

Critical minerals is another sector where there is potential for more extensive, mutually beneficial cooperation, but over-securitisation by both sides have pushed it further away than ever.

Despite China being by far the largest buyer of Australian critical minerals, the government’s Critical Minerals Strategy emphasises working with international partners including the US, UK, EU, Japan, Korea and India. China is conspicuously absent.

And in contrast to the 2010s, the Australian government has not approved a Chinese investment in the critical minerals sector since December 2020.

At the same time, Beijing would not tolerate its industry being reliant on a single foreign supplier of a strategically important input to the extent that companies in Australia and other countries are now reliant on China. China holds, for example, a 90 percent share of processed rare earths globally and Beijing has demonstrated a willingness to restrict supply.

Moreover, even if Canberra were to welcome Chinese investment in establishing rare earths processing operations in Australia, a rapidly expanding system of export controls and outbound investment screening mechanisms point to Beijing likely blocking any Chinese company that might consider it.

APEC’s stated aim is to “build a dynamic and harmonious Asia-Pacific community” by “championing free and open trade and investment” and “promoting and accelerating regional economic integration”.

The Australia-China relationship has been an exemplar to date. Deliberate choices by Canberra and Beijing will determine whether this continues.