{"id":18468,"date":"2015-09-16T00:42:58","date_gmt":"2015-09-15T16:42:58","guid":{"rendered":"https:\/\/www.curtin.edu.au\/news\/media-release\/china-not-the-be-all-and-end-all-for-wa-trade\/"},"modified":"2015-09-16T00:42:58","modified_gmt":"2015-09-15T16:42:58","slug":"china-not-the-be-all-and-end-all-for-wa-trade","status":"publish","type":"media-release","link":"https:\/\/www.curtin.edu.au\/news\/media-release\/china-not-the-be-all-and-end-all-for-wa-trade\/","title":{"rendered":"China: not the \u201cbe all and end all\u201d for WA trade"},"content":{"rendered":"<p style=\"text-align: center\"><strong>&#8211; The need to diversify trading partners and exports crucial for economy &#8211;<\/strong><\/p>\n<p>A report released today (Wednesday 16 September) by the Bankwest Curtin Economics Centre (BCEC) has emphasised the need to diversify Western Australia\u2019s exports and widen our trading partnerships beyond China to maximise growth opportunities and strengthen WA\u2019s economy.<\/p>\n<p>The Tiger, Tiger, Burning Bright? report examines issues that affect current trading patterns with Asia, opportunities for enhanced future trade, and strengthened economic relationships with China, Japan and other countries in the Asia-Pacific and Indo-Pacific regions.<\/p>\n<p>Professor Alan Duncan, BCEC Director, said international trade had a role to play in strengthening industrial sectors within the WA economy, including the mining and resources sectors but, critically, through greater diversification in the State\u2019s exports.<\/p>\n<p>\u201cThe report reminds us that as important as China is to the economic fortunes of the State, it is by no means the State\u2019s only export destination,\u201d Professor Duncan said.<\/p>\n<p>Together, the value of WA\u2019s exports to China and Japan amounted to some $95 billion in 2013-14.<\/p>\n<p>\u201cChina will remain a strong market for Western Australia\u2019s primary resources, as will Japan, as one of our traditional trading partners,\u201d Professor Duncan said.<\/p>\n<p>\u201cHowever, WA is extremely well positioned to capitalise on new trading opportunities beyond China and Japan, both in terms of the scale and composition of its trade with Asian partners.\u201d<\/p>\n<p>Alongside China and the traditional Japanese market as natural outlets for high value commodity exports, there are emerging opportunities for Western Australia to service the demand among other Asian trading partners \u2013 Indonesia, Malaysia, Vietnam and India in particular.<\/p>\n<p>Economic liberalisation across the Asian continent, with higher incomes among the rising middle class in Asia\u2019s emerging economies, has created a growing demand for prestige and luxury commodities \u2013 gold, high quality manufactures, agriculture and food \u2013 as well as tourism and education exports.<\/p>\n<p>\u201cThe State\u2019s trade and economic development strategies should certainly include a \u2018focus on quality\u2019 to capitalise on opportunities to sell to new markets for hi-tech or high-end products,\u201d Professor Duncan said.<\/p>\n<p>\u201cWA is well-positioned to capitalise on its reputation for high quality produce, and its comparative advantage in relation to time-zones and proximity to key trading partners in Asia.\u201d<\/p>\n<p>There has been a decline in manufacturing in Western Australia, and a reduction in the volume of manufacturing exports from WA to overseas markets far in excess of the falls seen in other states and territories.<\/p>\n<p>The falling share of manufactured exports in WA raises a question about whether the resources boom has reduced the competitiveness of other industry sectors in the State \u2013 the so-called \u2018Dutch\u2019 disease.<\/p>\n<p>\u201cHigh exchange rates have certainly affected the competitiveness of WA manufacturing, agriculture, education and tourism, although recent falls in the Australian dollar may alleviate the currency pressures for the State\u2019s businesses,\u201d Professor Duncan said.<\/p>\n<p>The share of new private capital expenditure in WA\u2019s manufacturing sector is now below three per cent of the State\u2019s total new private capital investment &#8211; its lowest level in more than 25 years.<\/p>\n<p>Unless the trend is reversed, the decline in new capital investment puts the competitiveness of the State\u2019s manufacturing sector at risk, as well as its capacity for technological innovation.<\/p>\n<p>\u201cThere is a clear need for new investment in the State\u2019s manufacturing industry so that the sector can continue to compete effectively and grow its international market share,\u201d Professor Duncan said.<\/p>\n<p>There is some nervousness about the provisions under the China-Australia Free Trade Agreement to allow Chinese-financed investment projects in Australia to be supported by migrant workers without the requirement for local labour market testing.<\/p>\n<p>\u201cThere is understandable caution regarding the labour market impacts of the new trade deal with China,\u201d Professor Duncan said.<\/p>\n<p>\u201cTrade agreements shouldn\u2019t be allowed to affect labour market conditions, or crowd out local labour market opportunities.\u201d<\/p>\n<p>The backing given to joint ventures under the China-Australia Free Trade Agreement (FTA) can provide new opportunities for Western Australian workers, as long as the State\u2019s workforce is protected through an active defence of labour market standards under any new trade arrangements.<\/p>\n<p>\u201cThere is no reason why FTAs shouldn\u2019t deliver value to Western Australia &#8211; as long as the State\u2019s workforce is protected and supported,\u201d Professor Duncan said.<\/p>\n<p>The manner of Australia\u2019s trading relationship with Asia is changing, with the traditional notion of the bilateral trader &#8211; \u201cwe sell, you buy\u201d &#8211; giving way to international business partnerships between Australian and Asian companies.<\/p>\n<p>Building on similar measures in earlier trade agreements with Japan, Korea, Singapore and the ASEAN economies, the recent China-Australia Free Trade Agreement adds to this changing narrative through its support for joint ventures and economic cooperation.<\/p>\n<p>The report also examines WA\u2019s trade and economic development from the perspective of WA\u2019s regions, and highlights important barriers that regional businesses and residents need to overcome in their pursuit of efficiency gains and growth.<\/p>\n<p>The WA economy can gain strength and resilience through trade diversification with emerging economies in Asia, not just in the breadth of commodities traded but also the countries with whom we do business.<\/p>\n<p><strong>A summary of the Report\u2019s key findings are outlined below.<\/strong><\/p>\n<p>Full copies of Tiger, Tiger, Burning Bright? are available upon request and from the BCEC website (<a href=\"http:\/\/www.business.curtin.edu.au\/bcec\">www.business.curtin.edu.au\/bcec<\/a>).<\/p>\n<p>Selected charts from the report are provided as an accompaniment with this release. Hi-resolution versions of all tables and charts in the report are available on request.<\/p>\n<p><strong>Key Findings<\/strong><\/p>\n<p><em><strong>A brief history of WA trade<\/strong><\/em><\/p>\n<ul>\n<li>WA has a long association with resource-driven growth, beginning with the Kalgoorlie gold rush of the 1890s which drew people from all over Australia and the world.<\/li>\n<li>Expansion in mineral and petroleum outputs has resulted in WA becoming dramatically more export-orientated and reliant.<\/li>\n<li>Export shares were only 4 per cent of gross state product (GSP) in 1970, rising to 28.6 per cent in 1990. By 2013-14, the export share had risen to 61.6 per cent of GSP.<\/li>\n<\/ul>\n<p><strong>WA\u2019s international trade profile<\/strong><\/p>\n<ul>\n<li>Mining products makes up around three-quarters of all goods and services exported from WA.<\/li>\n<li>Services exported from the state form a smaller component of the overall value of export products &#8211; 4.6 per cent.<\/li>\n<li>Eight out of the top ten export commodities in 2013-14 stem from the state\u2019s natural resources.<\/li>\n<li>Almost all of the top 20 merchandise exports from Western Australia have grown in value over the last 5 years.<\/li>\n<li>Iron ore exports have experienced an increase of 17 per cent across the five year period from 2009-10.<\/li>\n<li>In the most recent period from 2012-13 to 2013-14, the value of iron ore exports to Western Australia has increased by 30 per cent, from $55,665 million to $72,469 million.<\/li>\n<li>The value of gold exports from WA has fallen by 15 per cent in the last two periods.<\/li>\n<li>The export value of pearls and gems increased by 250 per cent between the last two periods.<\/li>\n<li>Merchandise and services imported to WA have grown at a faster pace than exports. Overall, merchandise imports increased by 81 per cent across the five year period to 2013-14, and service imports by 21 per cent.<\/li>\n<li>The value of exports has exceeded the value of imports across the majority of commodities traded between WA and other countries.<\/li>\n<li>Iron ore remains the highest value traded commodity, with two-way trade valued at $77.5 billion, increasing by 17 per cent since 2009-10.<\/li>\n<li>Services traded reveal more mixed results, with export values exceeding import values for the top five services in both 2009-10 and 2013-14. However, the remaining services traded show Western Australia importing a higher value of services than what the state exports.<\/li>\n<\/ul>\n<p><em><strong>Who do we sell to?<\/strong><\/em><\/p>\n<ul>\n<li>During the mining boom in Western Australia, net exports to APEC countries more than doubled as a percentage of GSP, from 15 per cent in 2004 to around 35 per cent in 2011.<\/li>\n<li>Western Australia is set to remain a strong net exporter to APEC countries with $120 million in exports compared with around $27 million in imports for 2013-14.<\/li>\n<li>Trade between WA and ASEAN countries is principally on primary goods, mostly resources and wheat.<\/li>\n<li>Australia has shifted from a net exporter with ASEAN countries before the start of the millennium to a net importer now.<\/li>\n<li>Net exports from WA to European Union countries have declined as a share of gross state product since the GFC, and particularly since 2013 with a significant fall in gold exports.<\/li>\n<\/ul>\n<p><em><strong>Trade and new business opportunities<\/strong><\/em><\/p>\n<ul>\n<li>In the short-to-medium term, the value and prospective increases in production volume of WA\u2019s main export commodities depends upon the continued health of China and other emerging markets in Asia, but also the ability of WA to remain competitive as a destination for foreign direct investment both in established and new industry sectors.<\/li>\n<li>Japan\u2019s future growth trajectory should provide some support for key WA commodity products such as iron ore and LNG exports.<\/li>\n<li>China\u2019s expansion has become increasing uncertain due to changes in senior political leadership, currency pressures and rising levels of credit, particularly in housing and infrastructure, two areas which are crucial to China\u2019s continued support for the expansion of iron ore and LNG exports.<\/li>\n<li>The current IMF assessment indicates that China will see reasonably strong growth over at least the next two years, albeit at reduced levels to that seen in the middle of the last decade.<\/li>\n<li>WA has a natural advantage in servicing global demand for high quality produce, being well situated in relation to time-zones and proximity to most of the Asian countries.<\/li>\n<li>The great challenge for Western Australia is to bridge the gap between knowledge and innovation on the one hand, and commercialisation and exports on the other.<\/li>\n<\/ul>\n<p><em><strong>Country trade partnerships<\/strong><\/em><\/p>\n<ul>\n<li>Asia is strategically important by virtue of its geographical proximity, but the narrative regarding trading patterns and new trading opportunities is changing.<\/li>\n<li>The traditional notion of the bilateral trader (\u201cwe sell, you buy\u201d) is giving way to more sophisticated international partnerships between Australian and Asian companies selling into a global market.<\/li>\n<li>WA is extremely well positioned to capitalise on new trading opportunities both in terms of the scale and composition of its trade with Asian partners.<\/li>\n<li>The WA economy can gain strength and resilience through trade diversification, not just in the breadth of commodities traded but also the countries with whom we do business.<\/li>\n<\/ul>\n<p><em><strong>WA trade and regional development<\/strong><\/em><\/p>\n<ul>\n<li>Mining is the largest employer in the Pilbara and Goldfields \u2013 Esperance regions.<\/li>\n<li>The South West is the only region where Manufacturing is still the largest employer, where it is marginally larger than Retail trade.<\/li>\n<li>Around 80 per cent of the state\u2019s large businesses are in the services sub-sector.<\/li>\n<li>Port Hedland is the world\u2019s largest bulk export terminal \u2013 in 2013-14 Port Hedland moved 370 million tonnes of exports.<\/li>\n<\/ul>\n<p><em><strong>Optimising WA regional trade and economic development<\/strong><\/em><\/p>\n<ul>\n<li>Whilst iron ore fines may not be worth their weight in gold the sheer volume of shipments (measured in hundreds of thousands of tonnes) has transformed Western Australia into an economic powerhouse.<\/li>\n<li>An important challenge is to broaden the base of regional economies and aim to expose more products and services to overseas markets.<\/li>\n<li>Education as an attractor to international business and investment<\/li>\n<li>Over the past several years the sector that has been most successful in terms of enrolments and commencements is the Vocational Education and Training (VET) sector.<\/li>\n<li>ELICOS (English Language Intensive Courses for Overseas Students) has also been a booming industry<\/li>\n<li>The education sector should not be regarded just as a provider of education and innovation, but should also be promoted as a valuable piece of infrastructure through which to attract skilled labour to the state, and to build global business networks.<\/li>\n<\/ul>\n<p><em><strong>WA\u2019s trading environment \u2013 benefits and barriers<\/strong><\/em><\/p>\n<ul>\n<li>It is a challenge for smaller or emerging businesses to access infrastructure, especially when the networks are stretched to capacity.<\/li>\n<li>At a macroeconomic level, protectionist policies are barriers that can significantly limit the access of overseas markets for our regional producers.<\/li>\n<li>WA trade strategy and policy<\/li>\n<li>The deal struck between China and Australia through the recent Free Trade Agreement offers mixed support to WA industry.<\/li>\n<li>Some agriculture sub-sectors in WA will benefit from phased tariff reductions, particularly producers of meat, seafood, wine and other boutique foods and horticulture.<\/li>\n<li>There has been no agreement on lower tariffs for staple crops \u2013 wheat, maize, corn, rice or canola \u2013 or for wool and cotton.<\/li>\n<li>Some nervousness exists regarding foreign-financed investment projects in Australia being supported by migrant workers without the requirement for local labour market testing.<\/li>\n<\/ul>\n<p><strong>Notes to Editor:<\/strong><br \/>\nThe Bankwest Curtin Economics Centre is an independent economic and social research organisation located within Curtin Business School at Curtin University. The Centre was established in 2012 with support from Bankwest (a division of Commonwealth Bank of Australia) and Curtin University.<\/p>\n<p><strong><em>Tiger, Tiger, Burning Bright?<\/em><\/strong> is the fifth report in the BCEC\u2019s \u2018<strong>Focus on Western Australia<\/strong>\u2019 series. The report examines a number of key questions relating to the composition and direction of trade by West Australian businesses and consumers. These include issues that affect current trading patterns with Asia, and opportunities for enhanced future trade and strengthened economic relationships with China, Japan and other countries in the Asia-Pacific and Indo-Pacific regions. BCEC\u2019s next report in the \u2018Focus on Western Australia\u2019 series is titled Securing Our Future: Meeting the challenges of WA\u2019s ageing population and will address an issue of growing importance to Western Australia in maintaining its economic growth story \u2013 population dynamics, ageing and retirement. This report is scheduled for release in November.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>A report released by the Bankwest Curtin Economics Centre has emphasised the need to diversify Western Australia\u2019s exports and widen our trading partnerships beyond China to maximise growth.<\/p>\n","protected":false},"author":4275,"featured_media":0,"template":"","meta":{"_acf_changed":false,"_oasis_is_in_workflow":0,"_oasis_original":0,"_oasis_task_priority":"","_relevanssi_hide_post":"","_relevanssi_hide_content":"","_relevanssi_pin_for_all":"","_relevanssi_pin_keywords":"","_relevanssi_unpin_keywords":"","_relevanssi_related_keywords":"","_relevanssi_related_include_ids":"","_relevanssi_related_exclude_ids":"","_relevanssi_related_no_append":"","_relevanssi_related_not_related":"","_relevanssi_related_posts":"","_relevanssi_noindex_reason":"","wds_primary_category":0,"wds_primary_research-areas":0,"footnotes":""},"categories":[4],"tags":[],"research-areas":[],"class_list":["post-18468","media-release","type-media-release","status-publish","hentry","category-research"],"acf":{"post_options":{"":null,"additional_content":{"title":"","content":"","image":false},"related_courses":false,"credits":{"author":"","photographer":"","media":false},"display_author":true,"banner":{"image":false}}},"featured_image":false,"author_meta":{"first_name":"Curtin","last_name":"University","display_name":"Curtin University"},"publishpress_future_workflow_manual_trigger":{"enabledWorkflows":[]},"_links":{"self":[{"href":"https:\/\/www.curtin.edu.au\/news\/wp-json\/wp\/v2\/media-release\/18468","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.curtin.edu.au\/news\/wp-json\/wp\/v2\/media-release"}],"about":[{"href":"https:\/\/www.curtin.edu.au\/news\/wp-json\/wp\/v2\/types\/media-release"}],"author":[{"embeddable":true,"href":"https:\/\/www.curtin.edu.au\/news\/wp-json\/wp\/v2\/users\/4275"}],"version-history":[{"count":0,"href":"https:\/\/www.curtin.edu.au\/news\/wp-json\/wp\/v2\/media-release\/18468\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.curtin.edu.au\/news\/wp-json\/wp\/v2\/media?parent=18468"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.curtin.edu.au\/news\/wp-json\/wp\/v2\/categories?post=18468"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.curtin.edu.au\/news\/wp-json\/wp\/v2\/tags?post=18468"},{"taxonomy":"research-areas","embeddable":true,"href":"https:\/\/www.curtin.edu.au\/news\/wp-json\/wp\/v2\/research-areas?post=18468"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}