Western Australia needs to diversify its export base and trading partnerships beyond the needs of China, a new report has recommended.
Tiger, Tiger, Burning Bright? from the Bankwest Curtin Economics Centre (BCEC) examines the issues affecting current trading partners in Asia and opportunities for enhanced future trade.
The report shows that 74.8 per cent of Western Australia’s goods exports come from the mining sector, with net exports to China dominating the market, worth $70.6 billion in 2013-14.
Japan was the next most lucrative market for exports, worth $23.9 billion in 2013-14, and Korea was worth 10.1 billion in the same year.
Western Australia’s exports comprised a 50.6 per cent share of total Australian exports in 2013-14, followed by Queensland with 17.4 per cent.
In the period from 2012-13 to 2013-14, the value of iron ore exports from Western Australia increased by 30 per cent, from $55,665 million to $72,469 million.
Iron ore remains the highest value commodity, with two-way trade valued at $77.5 billion, having increased by 17 per cent since 2009-10.
The value of gold exports from WA has fallen by 15 per cent in the last two periods, however the export value of pearls and gems increased by 250 per cent in the same timeframe.
It has become clear over the past 18 months that China’s expansion has grown increasingly uncertain due to changes in senior political leadership, currency pressures and rising levels of credit, particularly in housing and infrastructure, which are the two areas most crucial to China’s continued support for the expansion of Australian iron ore and LNG exports.
“China will remain a strong market for Western Australia’s primary resources, as will Japan, as one of our traditional trading partners,” Professor Duncan said.
“However, 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.”
BCEC director Professor Alan Duncan said China would remain a strong market for Western Australia’s primary resources, as well as Japan.
“However, 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,” he said.
Duncan suggested WA should also be looking at emerging opportunities for export to Indonesia, Malaysia, Vietnam and India.
“WA 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,” Duncan said.