Australia's exports to China reach record A$102.5B in H1, driven by lithium concentrate sales; diversification efforts amid China's economic coercion deemed short-lived as share of exports to China bounces back to 36%

Sample article from our Logistic & Supply Chain

August 21, 2023 (press release) –

The Chinese economy may be softening and commodity prices falling, but Australia’s exports to China hit a record $102.5 billion in the first half of this year thanks to massive shipments of lithium concentrate.

Lithium has overtaken liquefied natural gas as Australia’s second biggest export to China behind iron ore, with sales rocketing to $11.7 billion between January and June. Two years ago, first-half sales of lithium to China reached only $470 million .

China is taking almost all of Australia’s lithium output, underlining its dominance of both critical-minerals processing and of the energy transition more generally. Apart from China , just 2% goes to Belgium and 1% each to the United States and Korea , according to the Department of Industry, Science and Resources .

While the development of a major new export commodity is a boon to the economy, especially at a time when prices of other exports are sliding, China’s capture of the lithium market runs counter to the warning in the Australian government’s new critical minerals strategy of the danger of excessive reliance on a single customer.

The strategy declared that the ‘risks of disruption to critical mineral supply chains are heightened when mineral production or processing is concentrated in particular locations, facilities or companies’. Australia’s strategy was to work with ‘likeminded governments’ to diversify supply chains.

Detailed trade data from the Department of Foreign Affairs and Trade shows that the diversification of export markets during China’s two-year campaign of economic coercion of Australia was short-lived. Sales to most of Australia’s other principal trading partners have been falling sharply as sales to China recover.

When China embarked on its campaign of economic coercion, Australia was saved by its other Asian trading partners (see chart below). China’s share of Australia’s exports had peaked at 43% in May 2020 but plunged to 28% by the middle of last year.

Shares of Australia’s export markets, January 2015 to June 2023

Source: Australian Bureau of Statistics (six-month rolling total).

The slack was picked up by Japan , whose share of Australia’s exports went from 11% in mid-2020 to 21% by September last year, and by other Asian nations whose combined share rose from 22% to 34%, comfortably overtaking China .

But with China’s share climbing back to 36% in the first half of this year, Japan’s share has dropped back to 16% and the rest of Asia is now taking just 29%.

Australian coal sales to China stopped entirely during 2021 and 2022, causing huge shifts in the global coal trade. China started buying coal from Indonesia , which then cut its sales to India and elsewhere. India boosted its purchases of Australian coal that had previously gone to China .

These flows have now reversed. India’s purchases of Australian coal, for example, went from around $1.5 billion a month to $2.5 billion a month through much of last year, but are now back to about $1.3 billion . China is now spending about $1 billion a month on Australian coal.

China has also returned to purchasing Australian oil, with sales rising from nothing to $860 million in the first half of the year. Although never put on China’s list of banned Australian purchases, imports of wheat and other cereals (excluding barley) have risen rapidly from $500 million in the first half of 2021 to $3.1 billion so far this year.

The trade figures to the end of June don’t show any Australian exports of barley, for which China has only just agreed to drop its punitive tariffs. Tariffs remain on wine, and at the end of June, China still had trade bans on Australian copper ores, wood chips, timber and crayfish.

Total Australian exports to China rose by 22.4% in the first half of the year, despite a sharp, and continuing, fall in commodity prices.

China’s capture of Australia’s lithium exports highlights the tension between economic forces and strategic policy. The government favours investment from Western nations and its clear preference is to build supply chains with Western partners that bypass China .

The Foreign Investment Review Board has been knocking back efforts by Chinese companies to invest in the Australian critical-minerals industry. For example, it has vetoed moves by a company directed by a Chinese national, Astroid Australia, to purchase 90% of lithium miner Alita Resources and prevented Yuxiao Fund from increasing its 9.9% stake in rare-earths miner Northern Minerals .

However, China has been building its expertise in critical minerals since the 1980s. Its unrivalled lead in processing and manufacturing technology makes it the obvious choice for buyers wanting quality refined critical minerals.

More broadly, the concentration of export markets in China exposes Australia to the impacts of both downturns in the Chinese economy and future geopolitical tensions between the two countries. However, the experience of the past two years, when the Australian economy barely noticed the impact of China’s trade strikes, underlines the flexibility and adaptability of international markets.


The views expressed in content distributed by Newstex and its re-distributors (collectively, "Newstex Authoritative Content") are solely those of the respective author(s) and not necessarily the views of Newstex et al. It is provided as general information only on an "AS IS" basis, without warranties and conferring no rights, which should not be relied upon as professional advice. Newstex et al. make no claims, promises or guarantees regarding its accuracy or completeness, nor as to the quality of the opinions and commentary contained therein.


* All content is copyrighted by Industry Intelligence, or the original respective author or source. You may not recirculate, redistrubte or publish the analysis and presentation included in the service without Industry Intelligence's prior written consent. Please review our terms of use.

More from our Logistic & Supply Chain Coverage
See our dashboard in action - schedule an demo
Jason Irving
Jason Irving
- SVP Enterprise Solutions -

We offer built-to-order logistic & supply chain coverage for our clients. Contact us for a free consultation.

About Us

We deliver market news & information relevant to your business.

We monitor all your market drivers.

We aggregate, curate, filter and map your specific needs.

We deliver the right information to the right person at the right time.

Our Contacts

1990 S Bundy Dr. Suite #380,
Los Angeles, CA 90025

+1 (310) 553 0008

About Cookies On This Site

We collect data, including through use of cookies and similar technology ("cookies") that enchance the online experience. By clicking "I agree", you agree to our cookies, agree to bound by our Terms of Use, and acknowledge our Privacy Policy. For more information on our data practices and how to exercise your privacy rights, please see our Privacy Policy.