China to overtake the US in importance to Australian firms

CHINA will soon overpower the United States as the top trading partner with Australia's smaller businesses, with new research showing more firms are ordering their wares from the Asian superpower.

New analysis from HSBC Bank Australia suggests 40% of small and medium-sized companies are trading with the United States with 39% working with China.

But China will soon take the lead, with a survey of 114 industry sources finding 19% expect to do business with the communist nation in the coming 12 months, compared to 14% doing the same with the US.

HSBC head of business banking Paul Edgar said the shifting terms of trade was because China remained likely to expand.

"Since 2008, the US economy has decreased by 1% whereas China has grown by 45%," Mr Edgar said.

"China has been the world's factory for more than two decades and Australian companies have certainly taken advantage of the low manufacturing costs to improve their margins and grow their businesses."

With the falling Australian dollar, Mr Edgar said firms ought to consider also exporting to China as its market expands.