At two recent events in Melbourne – one hosted by the Australian Business Forum and the other the Australia China Business Council – we listened to learned economists debating the current and future economic status of China and how it will affect Australia.
As you may expect, the majority of comments and arguments focussed on the downside of China’s current reduction in GDP growth and the negative effect on Australia’s economy.
This is echoed by most major media outlets – including the American press.
Comments such as ‘stagnation’ and potential ‘recession’ in China have been thrown around all because Chinese growth has fallen from an average of 8.5 percent to 7.3 percent.
Don’t we love to complain!
I would like to see a discussion around a more balanced view, including any benefits.
Let’s start with the obvious – no Western country can claim a GDP growth of 7.3 percent and wouldn’t they love to.
The still reasonably new current Chinese government has taken a strong and absolutely positive approach by cautiously and steadily reducing the GDP growth and in return securing a much more sustainable growth pattern. How can that be termed ‘negative’?
No medicine tastes good if it needs to be effective to assist better health for the country. And certainly, the reduction of reasonably easy finance from the Chinese banks to business and the property market is uncomfortable to many. The tightening up of SOE companies performances and scrutiny is not always welcome. Then you add the very public challenge by the new leadership to reduce corrupt practices at all levels across China – a very brave move in my view.
Obviously it has, and still does create many complaints, displeasure and concerns from within sectors of the Chinese community.
At the same time, China’s manufacturers are being affected by the stagnant economies of Europe and beyond. This hurts, but China’s economy is not in trouble.
In my view the strong activities by the Chinese government is helping the Chinese business community to learn to adapt to a much more slower sustained growth, rather than the fast and somewhat easy growth China has experienced for the past 30 years.
Does that benefit Australia? Definitely!
How can a sustained and healthy Chinese economy not be of benefit? A more cautiously growing Chinese economy will further secure its path to becoming the world’s largest economy. If Australia continues to build on its broad based mutually successful relationship with China, we should applaud the country’s current reduction in GDP growth.
The concern to our industry is not the reduction of GDP growth in China, but the competition from the rest of the world doing business with China. We may be one of the preferred suppliers within certain industry sectors, but not the only one.
Instead we should focus more on our government’s ability to forge strong relations with China.
Publisher, Australia China Connections■