An overwhelming majority of Australian importers and exporters believe that when negotiating trade and finance issues with Chinese buyers and suppliers, the Chinese are in the stronger negotiating position according to a poll conducted by Citi.
The second round of the quarterly
‘Citi Australian Trade Finance Index’
, conducted for the bank by East & Partners, found that five out of six exporters and importers with a view on the subject believe that the balance of power in trade and finance negotiations lay with China and only 17% believed that it lay with Australia. There was no statistical variance in the result from importers and exporters.
The Australia-China bilateral trade relationship was worth US$120bin in 2011, comprising US$77bn in exports and US$43bn in imports, according to the Department of Foreign Affairs and Trade (DFAT). China supplanted Japan as Australia’s biggest trading partner in 2007 and bilateral Australia-China trade surpassed the US$100bn level for the first time in 2011.
The latest survey of Australian importer and exporter sentiment was conducted in January 2013 with CFOs, group treasurers and trade officers from 864 Australian companies with turnovers ranging from A$25m to over A$500m.
Ashley Bakes, Citi’s senior vice president of treasury and trade solutions in Australia, said that the results clearly showed China’s power as a price maker when both buying and selling. “It comes as no surprise that our exporters are highly reliant on Chinese demand in areas such as resources and agriculture and China is setting the price.
“Our importers, however, are also price takers. Chinese manufacturing now dominates areas such as electronics, computers, clothes and furniture because they are competitively priced. Without competition from other countries we are becoming increasingly dependent on China and this has shifted perceptions on the balance of power.”
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