The trouble with trading on China's good fortune

A trade deficit isn't necessarily a cause for concern, but the reliance on China to drive export growth will leave the economy particularly vulnerable in the event of a China slowdown.

Australian trade is expected to drive economic growth over the next few years, but that won’t occur without a few hiccups, such as in April when our trade balance slipped into deficit. The biggest concern for Australian trade remains its greatest strength -- China -- and our reliance on China leaves us particularly vulnerable if its economy slows.

Australia ran a modest trade deficit during April -- the first since December -- providing a relatively poor start to the June quarter for trade. The result missed expectations for a $510 million trade surplus.

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