I know we’re the lucky country but the Wall Street Journal has lost it today:
Luckily for Australia, the U.S.-China trade war happened.
Australia faced a personal-credit crunch, housing slump and weak business confidence, threatening to derail the longest-running growth streak in the developed world. Then it got a trade boost as U.S.-China relations soured.
Australia ships around a third of its exports to China, mostly commodities such as iron ore and coal that are used by heavy industry and in the building of apartments. Those exports are in demand as Beijing accelerates construction spending to head off damage caused by Washington raising tariffs.
Trade has been so buoyant that Australia logged its first current-account surplus—a measure of trade and financial flows with other countries—since 1975 in the second quarter of this year. That has provided some much-needed juice to Australia’s economy, on a 28-year run without a recession, as other headwinds to growth intensify. Australia’s gross domestic product expanded at its slowest pace since the financial crisis in the second quarter.
Much depends on Beijing’s response. “The domestic stimulus in China to offset the trade dispute has contributed to a short-term boost to the Australian economy and significantly mitigated the impact of the trade disputes on us,” Reserve Bank of Australia Deputy Governor Guy Debelle said on Aug. 15.
…Meanwhile, Australia appears to be benefiting from tighter U.S. visa procedures for Chinese students. Growth in higher-education enrollments by Chinese students in Australia far outpaced the U.S. in 2017-2018, said Australian education provider Navitas.
Never let a few fact get in the way of a good Trump bashing story. Iron ore was almost entirely a supply side story this year. Sure, steel output lifted on the back of some stimulus but iron ore imports didn’t as scrap inputs boomed. It was the Vale accident that drove nearly all of the uplift in the iron ore price. And both coals were hit hard as China cut imports thanks to the trade war.
As for students, Trump didn’t even apply Chinese tariffs until March 2018 when most of 2017/18 was finished. The breakneck growth in Chinese kids into Australian universities pulled the handbrake in 2019 and are now falling.
Australia has benefited from a lower currency than otherwise owing to the trade war. But it has not benefited from it economically overall.
The real upside for Australia, that the WSJ journal ignores, is in Trump hugely bolstering the sustainability of Australian democracy, which was sliding rapidly towards a silent CCP takeover before the trade war.