The major catalyst for Australia’s recent run of economic growth–the country has grown an average of 3.6 percent per year for the past 15 years, well above the OECD average of 2.5 percent for the same time frame–is rising demand for its natural resources from China. In August Australia’s Department of Foreign Affairs and Trade published its annual “comprehensive analysis of the growth, direction and composition” of the country’s trade relationships with East Asia, and the results suggest the recent torpor afflicting the developed world is not yet–and likely won’t–impact the developing economies. And that spells a bright future for Australia.

Following a brief downturn that coincided with the global economic malaise from 2007 to 2009, the value of Australia’s exports to East Asia rose 21.3 percent to AUD176.2 billion in 2010.

Exports to China grew by 34.3 percent to AUD64.4 billion. Exports to Japan (AUD45.7 billion, up 13.4 percent), the Republic of Korea (AUD22.4 billion, up 28.3 percent) and Taiwan (AUD8.9 billion, up 26.2 percent) also expanded.

Since 2005 Australian exports to East Asia have increased by 12.8 percent per year. Iron ore and concentrates shipments to the region grew by 64 percent to AUD49.2 billion, crude oil exports rose 39.8 percent to AUD8.8 billion and aluminum exports rose 6 percent to AUD4.1 billion. Coal, though overall shipments declined by 1.1 percent, was the second-largest Australian export to East Asia, at AUD29.3 billion. Natural gas exports were valued at over AUD10 billion.

China remained Australia’s largest trading partner in East Asia in 2010 and was also the largest partner for both exports and imports of goods and services.

Australia’s trade with China increased 23.6 percent to AUD105.3 billion in 2010; since 2005 the bilateral trade relationship has grown by 20.2 percent per year, compared with 10.2 percent for East Asia overall. Japan was the second-largest partner for two-way trade, as exports and imports of goods and services grew by 11.8 percent to AUD66.1 billion. The Association of Southeast Asian Nations (ASEAN), which includes Brunei, Burma (Myanmar), Cambodia, Indonesia, Laos, Malaysia, Philippines, Singapore, Thailand and Vietnam, accounted for 26.6 percent of Australia’s two-way trade with East Asia, valued at AUD80.5 billion in 2010, up 5.3 percent from 2009.

Exports of goods and services to China grew 34.3 percent to AUD64.4 billion in 2010. The five-year trend is 27.3 percent per year. Clearly, Australia is benefitting from the strong growth of China’s economy in recent years, which is leading to high demand for many of the resources Australia exports. This new demand on top of existing developed-world appetites that must still be satisfied has pushed commodity prices higher, too.

Exports of iron ore and concentrates–Australia’s largest export to China–rose 59.2 percent to AUD34.7 billion. Coal exports declined 8.1 percent to AUD5.2 billion in 2010, while exports of other ores and concentrates–including lead, zinc and manganese–rose 54.7 percent to AUD2.1 billion. Shipments of crude oil from Australia to China grew by 109.5 percent to AUD1.7 billion.

It’s important to note, however, that although China is Australia’s No. 1 trading partner in the region, there’s more than just one emerging Asian market hungry for resources.

In 2010 two-way with Japan increased 11.8 percent to AUD66.1 billion and accounted for 12 percent of Australia’s total trade with the world, 21.8 percent with East Asia. Exports to Japan grew 13.4 percent to AUD45.7 billion in 2010. Australia’s major merchandise exports to Japan included coal, which declined 6.4 percent to AUD14.8 billion, natural gas, which increased 23.4 percent to AUD8.7 billion; and iron ore and concentrates, which was up 70.3 percent to AUD8.6 billion. In the aftermath of the Fukushima-Daiichi nuclear power plant disaster Japan is aggressively seeking new sources of energy, a search that’s led it to Australia and the ample stores of natural gas Down Under.

The Fukushima disaster will add an estimated 20 million tonnes a year to Japan’s gas needs, and Australia–through new projects such as Pluto 1, Gorgon and Prelude in Western Australia–is a likely supplier. Industry forecasts suggest Australia could soon surpass Qatar as the world’s biggest exporter of gas.

In 2010 Australia’s two-way trade in goods and services with ASEAN increased 5.3 percent to AUD80.5 billion. Exports rose 7.4 percent to AUD29.9 billion, while imports increased 4.1 percent to AUD50.6 billion. Australia’s top exports to ASEAN in 2010 were crude petroleum, which was up 44.7 percent from 2009 to AUD3.7 billion; gold, which grew 28.6 percent to AUD2.4 billion; wheat, which totaled AUD1.8 billion; copper, which was up 36.3 percent to AUD 1.1 billion; and aluminum, which declined 21.6 percent to AUD 976 million.

The Middle Kingdom and Western Australia

Last week Western Australia Premier Colin Barnett signed a trade and investment agreement with officials of China’s National Development and Reform Commission, one of the main economic policy bureaus in the Middle Kingdom. It’s the first time China has entered into such a pact with a state or provincial government anywhere in the world, and it reflects the fact that 70 percent of national exports to China are from Western Australia and 80 percent of Chinese investment in Australia flows to the resource-rich state.

The move is designed to ensure China is able to take minority stakes in major resource projects and infrastructure developments in WA. Mr. Barnett noted that China was offended after being largely left out of the AUD5.9 billion Oakajee port and rail project in Western Australia’s Mid-West region. China has invested heavily in the Mid-West’s iron ore mines but its bid to build a rail and port network was rejected; the project has since stalled after major cost overruns.

Western Australia’s multibillion dollar lineup of liquefied natural gas projects is a likely target for Chinese investment.

We’ll take a look at Australian politics at the federal level in the next edition of AE Weekly.