Australian exporters upbeat on business outlook in China despite trade war, central bank says

In a speech in Sydney, Reserve Bank of Australia (RBA) Deputy Governor Andrew Hauser said that during a recent trip to China he found confidence that Beijing would do what was needed to sustain economic growth.

Hauser met a wide range of Chinese organisations and Australian exporters on the trip in early April, which just happened to follow the announcement of sky-high U.S. tariffs on the Asian giant that led to a collapse in bilateral trade.

He heard a striking confidence that China was going into the trade war with a strong hand and detected little expectation that the Chinese currency would be devalued to help offset the impact of U.S. levies on prices there.

In particular, he was struck by how upbeat Australian firms were about their business outlook in China. Firms in the steel and iron ore sector - Australia's largest export to China - saw few threats to the scale and cost advantages of Australian ore relative to other producers in the near term.

"The recovery in sentiment in early 2025, and confidence that the authorities would ‘do what it takes’ to sustain the economy was part of it," said Hauser.

"But there was also a sense that recent developments in trade policy could enhance their competitive position in Chinese markets."

He noted that it was possible Australian firms could see more intense competition at home and overseas from Chinese businesses discounting trade diverted from U.S. markets. However, it was unclear how big the impact could be given there was limited overlap between the goods and services produced by China and Australia.