Is it always to the good that Australia has a trade deficit with China & China a trade surplus with Australia?

Question

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Answer 1

The true answer is that it is of no digniifcance what the balance of trade between two countries is in isolation. If Australia buys things from China and sells other things to the rest of the world, and the rest of the world sells things to China, everyone's trade can be in equilibrium even though there are large "bilateral deficits". What matters is the country's balance of payments current account as a whole. Even that doesn't matter much if exchange rates are free to move around, because capital movements will compensate for the current account deficit. It only becomes a problem when an economy as a whole is borrowing so much that it starts to have difficulties paying its debts.

Answer 2

This is because China has a no of things which Austalian economy finds it cheaper to import rather than manufacure locally.Basically China has low cost labour
and the manufacuring cost is also cheaper at the same ittries to improve the quality.when the demand for products goes up naturally even in China the cost will go up.at a certain point of time it won't be advantageous for
Australia to import.then instead of trde deficit there will be trade surplus enjoyed by Australia.

Otherwise Australia can also put import taxes high for products from China.So there are a no of ways to see that the trade deficit does not become higher tham managable.So just do not worry.These things take care by laws of demand and supply.

Answer 3

China cheats anybody it does organisation with. Australia isn't a purpose any more suitable than the different united states is. definite, the Rio Tinto scandal develop into one many shameful practices the chinese authorities makes use of to purpose to regulate international commerce.

Answer 4

Good for Chinese and bad for Australia.