China's wool import demand: implications for Australia

Abstract

China is the largest importer of Australian wool. China's demand for wool has significant implications for wool producers in Australia. In this paper, an AIDS model is used to analyse the responsiveness of China's demand for wool imports and preferred sources of imports of wool. The results indicate that, in general, China's demand for wool imports is not very responsive to changes in prices and expenditures. When demand for wool imports increases, China has a tendency to initially obtain imports from countries other than Australia. In the foreseeable future, it is unlikely that China's demand for wool imports will experience significant increase. The wool trade between China and Australia may change, depending on global demand for woollen products, demand for woollen apparel by Chinese consumers, and changes in Chin's regulations to protect the environment.