5302.0 - Balance of Payments and International Investment Position, Australia, Jun 2015 
Quality Declaration
Quality Declaration ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 01/09/2015
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INTRODUCTION This article is the first in a series of analytical studies intended to present a picture of the Australian economy and its interactions with the rest of the world. It focuses on the interactions between the Australian and Chinese economies, particularly with regard to international investment, trade in goods and services, demographic and immigration statistics. China is considered to be a major trading partner of most developed economies and Australia is no exception. As such, the relationship between our interconnected economies is of increasing interest to policymakers. Australia has seen international investment increase and export markets expand as a result of diminishing trade barriers between the two economies. INTERNATIONAL COMPARISON OF GROSS DOMESTIC PRODUCT (GDP) According to the International Monetary Fund (IMF) - World Economic Outlook, in 2014 China's GDP topped US$10 trillion, significantly larger than Australia's GDP of US$1.4 trillion. China is currently ranked second in the world, while Australia is ranked 12th. However, when assessing GDP per capita, Australia is ranked 5th in the world while China is ranked 80th. GROSS DOMESTIC PRODUCT: Selected Countries, Current Prices
An alternate comparison between countries is on a purchasing power parity (PPP) basis, these data are available from the International Monetary Fund, World Economic Outlook Database, April 2015. INTERNATIONAL INVESTMENT Chinese foreign direct investment in Australia has been increasing in recent years, more than doubling since 2011, to $30.0b in 2014. However, the United States of America continues to be the primary investor in Australia, with foreign direct investment of $163.4b in 2014. In 2014, Chinese foreign direct investment equity in Australia increased $0.9b (8%) to a level of $12.1b, contributing 2% to total foreign direct investment equity. When comparing countries in 2014 for direct investment in Australia, equity capital and reinvested earnings, China is ranked 9th behind the United States of America, United Kingdom, Japan, Netherlands, Canada, Germany, Switzerland and Singapore.  - Selected Countries.GIF) Footnote(s): (a) Foreign direct investment statistics are compiled consistently with other countries compilations and are classified by the country of the immediate partner country, which shows the immediate source of funding but may not show the country of the investor who ultimately controls the investment. Source(s): ABS, International Investment Position, Australia: Supplementary Statistics, 2014 (cat. no. 5352.0). Australian foreign direct investment in China has also been increasing, nearly doubling since 2011 to a level of $12.1b in 2014. This was driven by investment in equity capital and reinvested earnings which increased $5.7b (89%) between 2011 and 2014. FOREIGN DIRECT INVESTMENT: Australia and China, AU$m
Investment income paid to Chinese residents (debits) has increased $0.4b (42%) between 2013 and 2014, while income received (credits) by Australian residents from Chinese residents has increased $0.6b (86%) to $1.3b in the same period.  Source(s): ABS, International Investment Position, Australia: Supplementary Statistics, 2014 (cat. no. 5352.0). The mining industry has been the major recipient of investment from China. Investment in the mining industry accounted for 65% of Chinese foreign direct investment equity in Australia in 2014, compared with 78% in 2013. DIRECT FOREIGN EQUITY INVESTMENT: Chinese Investment in Australia(a) - Selected Industries, AU$m
EXPORTS OF GOODS (CREDITS) Over the past decade Australian exports of goods to China have grown more strongly than exports to any other country. In 2009, China became Australia's major destination for exports of goods, overtaking Japan's longstanding position. On an international merchandise trade basis, the divergence between exports of goods to China and other countries has continued to grow, with China receiving $89.4b, or 34%, of Australia's exports of goods in 2014. This was followed by Japan, that received $47.6b, or 18%, of Australia's exports of goods. MERCHANDISE EXPORTS: Selected Countries - Original, Free on Board Value, AU$m
 Source(s): ABS, International Trade in Goods and Services, Australia (cat. no. 5368.0), Table 14a. On an international merchandise trade basis, using the Standard International Trade Classification (SITC), the main component contributing to the growth of exports to China was crude materials, inedible, except fuels (SITC 2), increasing $56.2b (1,074%) from $5.2b in 2004 to $61.4b in 2014. Furthermore, exports of food and live animals (SITC 0) to China have been of growing importance, increasing $3.2b (474%) from $0.7b in 2004 to $3.9b in 2014. In 2014, exports of food and live animals (SITC 0) were driven by cereal grains and cereal preparations (SITC 04), with exports of $1.8b and meat and meat preparations (SITC 01), with exports of $1.2b. MERCHANDISE EXPORTS TO CHINA: SITC Rev. 4(a) - Original, Free on Board Value, AU$m
EXPORTS OF GOODS BY STATE While all states have grown between 2004 and 2014, growth has been more prominent in Western Australia. In 2014, exports to China from Western Australia were $63.5b, this accounted for 71% of total exports to China. Queensland is the second major state of origin with exports of $10.2b in 2014. MERCHANDISE EXPORTS TO CHINA: State of Origin - Original, Free on Board Value, AU$m
Analysis at the Australian Harmonized Export Commodity Classification (AHECC) level, shows exports of iron ore to be the main commodity driving the crude materials, inedible, except fuels (SITC 2) component. In 2014, iron ore exports to China from Western Australia were $48.9b, contributing 77% of total exports from Western Australia to China for the year. EXPORTS OF SERVICES (CREDITS) The balance of trade in services to China has remained in surplus since 1999. In 2014, it was estimated at $6.0b, up $1.0b (21%) on the surplus in 2013. This has been a result of significant growth in exports of services to China which have more than tripled in the past decade. In 2004, China was ranked as Australia’s 5th largest destination for international trade in services exports, totalling $2.7b, contributing 7% to total services credits. In 2010, China overtook the United States of America to be ranked as Australia’s major destination for exports of services and has maintained this position since. In 2014, exports of services to China were $8.2b, contributing 14% to total services credits, this is an increase of $5.5b (206%) between 2004 and 2014. SERVICES CREDITS: Selected Countries - Original, Current Prices, AU$m
SERVICES CREDITS: Selected Countries - Original, Current Prices
The main component contributing to the increased trade in services credits with China was exports of travel services. Since 2004, exports of travel services have increased by $4.8b (208%) to $7.1b in 2014. This was primarily driven by personal travel services, mainly education-related travel. Education-related travel services increased by $2.7b (158%) from $1.7b in 2004 to $4.4b in 2014. SERVICES CREDITS: Exports to China - Original, Current Prices, AU$m
Movements in the education-related travel series are largely driven by changes in international student counts. Counts of Chinese student visa holders in Australia, published by the Department of Immigration and Border Protection in Student Visa and Temporary Graduate Program Trends, 2013-14, shows a peak in student numbers at 30 June 2010, with 79,861 student visa holders. This was followed by a modest fall in counts through more recent years, but has recovered somewhat as at 30 June 2014. China continues to be the prime country of residence of international students with 60,315 student visas granted to Chinese residents in the 2013-14 financial year.  Source(s): Department of Immigration and Border Protection, Student Visa and Temporary Graduate Programme Trends, 2013-14. IMPORTS OF GOODS (DEBITS) Annual imports of goods from China have grown fairly consistently over the past decade. China became the primary source of Australian imports in 2006, overtaking the United States of America which experienced more subdued growth over the period. In 2014, imports of goods from China were $52.0b, contributing 21% to total imports. This was followed by United States of America at $26.4b (10%) and Japan at $17.2b (7%). MERCHANDISE IMPORTS: Selected Countries - Original, Customs Value, AU$m
 Source(s): ABS, International Trade in Goods and Services, Australia (cat. no. 5368.0), Table 14b. On an international merchandise trade basis, using the SITC, the main component contributing to the growth of imports from China was machinery and transport equipment (SITC 7), increasing $15.7b (226%) from $6.9b in 2004 to $22.6b in 2014. This was followed by imports of miscellaneous manufactured articles (SITC 8), increasing $8.8b (133%) from $6.6b in 2004 to $15.5b in 2014. MERCHANDISE IMPORTS FROM CHINA: SITC Rev. 4(a) - Original, Customs Value, AU$m
Analysis at the 2 digit SITC level, shows telecommunications and sound recording and reproducing apparatus and equipment (SITC 76) and office machines and automatic data processing machines (SITC 75) to be the main contributors to the machinery and transport equipment (SITC 7) import series. In 2014, imports of telecommunications and sound recording and reproducing apparatus and equipment (SITC 76) from China were $6.7b. This was driven by telecommunications equipment, nes and parts, nes and accessories of apparatus falling within division 76 (SITC 764), with imports of $5.6b in 2014. Equally significant, in 2014, were imports of office machines and automatic data processing machines (SITC 75) from China of $6.2b. This was driven by automatic data processing machines and units thereof, nes (SITC 752), with imports of $4.9b in 2014. IMPORTS OF GOODS BY STATE In 2014, the majority of Australian imports of goods from China were destined for New South Wales, with imports of $24.8b. This was followed by Victoria and Queensland with imports of $14.9b and $6.1b respectively. Similar to the total level, imports into New South Wales were driven by machinery and transport equipment (SITC 7), with imports of $14.1b in 2014. This was followed by miscellaneous manufactured articles (SITC 8), with imports of $6.1b. MERCHANDISE IMPORTS FROM CHINA: State of Final Destination - Original, Customs Value, AU$m
IMPORTS OF SERVICES (DEBITS) Total services debits have nearly doubled since 2004, increasing by $31.9b (83%) from $38.5b in 2004 to $70.4b in 2014. Australia’s imports of services from China have also seen similar growth over the period. Australia's imports of services from China increased $1.0b, from $1.2b in 2004 to $2.2b in 2014. Although imports from China have increased, China's ranking fell from 7th in 2004 to 8th in 2014. During this time the United States of America remained the major source for Australia's imports of services. SERVICES DEBITS: Selected Countries - Original, Current Prices, AU$m
SERVICES DEBITS: Selected Countries - Original, Current Prices, AU$m
The main component contributing to the rise in imports of services from China was travel services, which increased $0.5b (89%) from $0.6b in 2004 to $1.1b in 2014. The personal, other travel services component has been the main contributor to the travel services debits series and was the main driver to the overall growth of travel services debits. The personal, other travel services component consists primarily of tourism-related travel. Growth in this series is supported by overseas arrivals and departures data, with record numbers of Australian residents undertaking short-term travel to China, citing holiday or visiting friends/family as the main purpose for their journey. SERVICES DEBITS: Imports from China - Original, Current Prices, AU$m
 Source(s): ABS. DEMOGRAPHY - AUSTRALIA'S POPULATION BY COUNTRY OF BIRTH People born in China made up 1.9% of Australia’s population at 30 June 2014. This is the third largest group of Australian residents born overseas, following people born in the United Kingdom (5.2%) and New Zealand (2.6%). .GIF) Footnote(s): (a) Based on the top 10 countries of birth (excluding Australia) at 30 June 2014. (b) Includes Channel Islands and Isle of Man. (c) Estimates for 1992-2011 have been recast and estimates from June quarter 2013 onwards are preliminary - see paragraph 9 of the Explanatory Notes in Migration, Australia, 2013-14 (cat. no. 3412.0). Source(s): ABS, Migration, Australia, 2013-14 (cat. no. 3412.0). Over the past decade, the proportion of the Australian population that were born in China increased from 1.0% in 2004 to 1.9% in 2014. Over the same period, proportions increased for people born in New Zealand (from 2.1% to 2.6%) and India (from 0.7% to 1.7%), however decreased for people born in the United Kingdom (from 5.6% to 5.2%). The number of Australian residents born in China more than doubled from 205,200 persons in 2004 to 447,400 persons in 2014. In 2014, Chinese-born Australian resident women outnumbered men, with 81.9 males for every 100 females. It was a different story at the time of Federation in 1901, when there were just over 29,900 Chinese-born Australian residents. Of these, around 29,500 were males and 400 were females. CHINESE BORN AUSTRALIAN RESIDENTS: By Gender
The median age of Australian residents born in China is 35.5 years, this is compared with the median age of Australian born residents of 33.6 years. The Chinese-born median is younger than the other top ten source countries except India (33.2 years).  Source(s): ABS, Migration, Australia, 2013-14 (cat. no. 3412.0). FURTHER INFORMATION This article has presented analysis on a calendar year basis, however, a number of these data series are available monthly or quarterly. The following ABS publications and sources were used to compile this article:
For further information on exports, imports and international investment with other countries contact the International Accounts Director on Canberra (02) 6251 7988 or email balance.of.payments@abs.gov.au. Document Selection These documents will be presented in a new window.
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