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Australia and
Japan: Trade Relationships with China

 

Statement of the Problem

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       China has become a central player in the
global economy in recent decades. Australia and Japan are two economies that
are intimately linked with China. Australia and China are deeply complementary
trade partners, partly due to strong Chinese demand for Australia’s resources (East
Asian Bureau of Economic Research, 2016). Japanese trade with China has also taken
on increasing importance, including exports to China to produce goods for
re-export (Thorbecke, 2015).

       Research has been conducted on the levels
and composition of Australia’s trade with China (Findlay, 2010; Ien, 2010; Mackerass,
1996; Minyue, 2006; Tisdell, 2006; Zhang, 2008). Similarly, research has been
conducted on the levels and composition of Japan’s trade with China (Abe, 2003;
Armstrong, 2011; Fung, 1998; Kwan, 2014; Morino, 1991; Ohashi, 2004; Xing, 2007).
These bodies of research can be compared, updated and synthesised in order to
draw conclusions regarding the key drivers of shifts in the trade relationships
between Australia and China, and Japan and China, respectively.

       This comparative study of Australian and
Japanese trade with China should be of interest for a number of reasons. First,
Australia and Japan have experienced differing economic outcomes in recent
decades. Australia has recently set a record for the most consecutive quarters
of positive GDP growth, driven in part by its trade with China, while Japan is still
mired in its economic “lost decades”. Second, while Australia and Japan have
experienced differing economic outcomes, they face similar security challenges.
Both countries have security alliances with the United States, which sit
alongside their intimate economic relationships with China. Hence, analysing
the composition and drivers of Australia and Japan’s trade with China should be
of interest in its lessons for economic performance and provide insights on how
shifts in economic dependency sit alongside security environments. Third, these
analyses of the levels and composition of trade will provide a useful
foundation to make policy recommendations to Australia and Japan in the context
of their trade with China.    

 

Research Questions

 

What
are the levels and compositions of Australia and Japan’s trade with China?What
have been the key drivers of notable changes in the levels and composition of
Australia and Japan’s two-way trade with China? 
    

Methodology

 

       This policy paper will be a qualitative
study. The initial focus will be conducting data analysis via the UN Comtrade
database to create a set of comparable, summarised time series data on the
levels and composition Australia and Japan’s two-way trade with China,
respectively.  

       Alongside drawing conclusions from this
data analysis, a literature review will be conducted to seek evidence on the
drivers of changes in the levels and composition of Australia and Japan’s trade
with China. In particular, views from a range of studies will be compared in
order to assess whether there is consensus and debate on the drivers of shifts
in the levels and compositions of trade over time. 

       In light of the research outcomes under
the methodological approaches, outlined above, this policy paper will canvass policy
options for Australian and Japanese consideration, with a focus on economic
growth and security over coming decades.    

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