- September 10, 2015
- Kate Sheehan
Why is China so important?
There is a lot of talk about China, the Chinese stock market and the Chinese free trade agreement.
You may well ask – why is everybody so concerned about China?
You have probably heard that when China’s economy sneezes, Australia’s economy catches a cold.
It is a reflection of an economic fact that our resource-rich country relies heavily on the growing Chinese economy to export its resources to. China accounts for almost one-quarter of Australia’s exports of natural resources – particularly coal and iron ore.
Massive Economic Reform
China has undergone massive economic reform in the past twenty years as it has moved closer to a market-based economy. Successive Australian Governments have moved to position Australia as a trading partner with China and largely their initiatives have paid off.
World’s Second-Largest Economy
China is now the second-largest economy in the world and accounts for 50% of world economic growth. The Australian economy has benefited greatly from China’s growth and emergence into the world economy. In fact, many would now say that Australia has become very reliant upon the Chinese economy.
China now accounts for almost 33 percent of our exports and more than a quarter of our two-way trade. Our reliance upon China is now even greater than when Japanese industrialisation was at its peak,” according to Commsec analyst Craig James, who used the record trade surplus of $35.02 billion in the 12 months to July 2014 as evidence to support his claim. To you and I that just seems like a bunch of very big numbers and we need a way to put them into context. So, how about this?
According to a recent Australia China Business Council report, trade with China was worth $14,480 to the average Australian household last year. That’s a whopping 51 percent more than just five years earlier.
Australian Natural Resources
While our natural resources form a large part of our trade relationship with China, they’re not the only sector of the economy, with the services sector one of the quickest growing markets in Australian-Chinese economic relations with tourism and education growing at massive rates.
Australia has always relied upon trade with major partners for prosperity. Today the opportunities for further growth and prosperity lie close to home in the Asian region. China is the biggest, fastest-growing market in the world and matters a great deal to Australia.