Crypto News: Supply Lines: China-Australia trade thaw

Australia reported a fifth consecutive year of trade surpluses and opened 2023 with the enticing prospect of further bolstering overseas shipments as it reheats relations with the world's second-largest economy. (Read more here)

Australia and China's top trade officials met Monday for the first time since 2019, in the latest sign of thawing diplomatic ties. Trade Minister Don Farrell and Commerce Minister Wang Wentao held virtual talks for over 90 minutes.

Australia's ties with China had frayed since 2018 when it barred Huawei from building its 5G network, and went into freefall in 2020 as then-Prime Minister Scott Morrison called for an independent probe into the origins of coronavirus in Wuhan.

Beijing responded with a volley of punitive trade actions that hit Australian commodities ranging from coal to barley, lobsters and wine.

For More: Australia, China Trade Ministers Hold First Talks Since 2019

Broadly, Australia's exports have been underpinned in recent times by demand for iron ore, coal and natural gas — with prices of the latter two fueled by Russia's invasion of Ukraine. Services exports are likely to be boosted in 2023 — also by China — following Beijing's decision to abandon Covid Zero.

"There is further upside due to the rapid reopening of the Chinese economy" and the government's edict that students need to take classes in person, said Belinda Allen, a senior economist at Commonwealth Bank of Australia. "Tourism exports should also be a clear beneficiary given China was the largest source of tourism spend pre-pandemic."

At its peak in 2019, Australian services exports accounted for 20% of total shipments and education made up around 40% of services. On its own, education was worth around $A40 billion ($27.7 billion) and represented 8% of total exports.

Despite the tensions, China remained Australia's largest export destination as the government in Beijing didn't try to restrict the massive and highly lucrative iron ore trade.

For More: Key China Coal Importer Buys Australia Cargoes as Curbs Ease

During Monday's talks, Farrell accepted an invitation from his Chinese counterpart to visit Beijing in the near future for further discussions. The Australian minister had said previously that he would be raising China's ongoing sanctions.

There's never been any official confirmation of a ban on imports of lobster or coal and China has continued to insist that its trade restrictions are in line with World Trade Organization rules.

— Michael Heath in Sydney

Easing off | Global logistics tensions moderated in January, falling near to the levels last seen in 2020, the Federal Reserve Bank of New York said. The Global Supply Chain Pressure Index declined to 0.95 standard deviations above is historical mean last month from 1.19 in December, the New York Fed said on its website Monday. It peaked at 4.31 in December 2021. The largest contributing factors to the easing were declines in Korean and Chinese delivery times, and smaller euro-area backlogs. The gauge brings together 27 variables that take the temperature of everything from cross-border transportation costs to country-level manufacturing data in the euro area, China, Japan, South Korea, Taiwan, the UK and the US.

Tech tumble | Taiwan's exports fell by the most since 2009 last month as waning global demand for technology products and the Lunar New Year holiday weighed on international trade.
Low flow | The Russian government's oil and gas revenue slumped in January, contributing to the biggest budget deficit for the first month of the year since at least 1998.
Brexit effect | Two Bank of England officials warned that Britain's departure from the European Union is helping to stoke inflation and is one of the factors pushing up interest rates.
Metal duties | The US is preparing to slap a 200% tariff on Russian-made aluminum as soon as this week to keep pressure on Moscow as the one-year anniversary of the invasion of Ukraine nears, according to people familiar with the situation.
Slow food | Ukrainian traders and authorities say that Russia is purposefully slowing the pace of moving cargo and passengers through ports by pushing the bounds of last year's landmark deal to reopen some Ukrainian ports for vital food exports.
Labor pains | Ford's engineering ranks may bear the brunt of additional job cuts the automaker has alluded to in the wake of disappointing earnings, judging from Chief Executive Officer Jim Farley's latest interview.
Taking a bath | A failure to take online shopping seriously harmed US retailer Bed Bath & Beyond — then product missteps and misguided financial maneuvers hastened its decline.

Spot trucking | Disciplined US truckload carriers will be well-positioned when the cycle turns and the spot market rebalances, which Bloomberg Intelligence expects could happen as early as the second quarter.
Margin eaters | North American railroads were hard-pressed to improve margins in the fourth quarter in the face of inflationary pressures and a concentrated effort by most carriers to right-source networks with transportation employees, critical for improving service and fluidity, Bloomberg Intelligence says.
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