Jan 21, 2014

China walks an economic tightrope as Australia holds its breath

By all measures, China's economic growth is slowing. How much will it slow, and how quickly? And what does that mean for Australia? Local business will be holding its breath.

Michael Sainsbury — Freelance correspondent in Asia and <em>Little Red Blog</em> Editor

Michael Sainsbury

Freelance correspondent in Asia and Little Red Blog Editor

china economy

So now we know. China’s statisticians have declared the country’s GDP grew at 7.7% last year, the equal lowest in more that a decade and just lower than last year’s 7.8%. Although numbers from China’s Party-controlled Bureau of Statistics are notoriously fudged and usually revised about six months down the track, it is clear the Chinese economy continues to slow. Even using a different metric — credit growth, electricity consumption and rail freight, which Chinese Premier Li Keqiang says gives a better picture of the economy — it is clear China’s economy is trending downwards, with the first two down for December.

Australia’s economy is the most economically entwined with China’s, so that is not good news for our own growth prospects. The only upside is that our dollar falls along with China’s headlines growth, making our exports more competitive.

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7 thoughts on “China walks an economic tightrope as Australia holds its breath

  1. MJPC

    Two comments from this article say it all.
    “unstable, unbalanced, unco-ordinated and ultimately unsustainable”, when speaking of China’s economy and:
    “He must also begin urgently remediating the country’s devastating environmental issues ”.
    Continued damage to the environment is unsustainable, either for the health of the populace and, indirectly for the ruling party. How this is going to affect Australia? China is already going to renewables and seeking other ways to generate power away from burning tonnes of coal.
    It is only in Australia that we have a government willing to assist in destroying the world environment for short term financial gain (for some)- of course the train will have left the station before this government hears the whistle to get on board what the future has to be.

  2. pinkocommierat

    Thanks! This item is dead informative, but it could’ve used another proof-reading before publication!!

  3. klewso

    If he does fall, will that be Labor’s fault too?

  4. Dogs breakfast

    A few points on an otherwise worthy article –

    “Property markets in cities like Sydney, Vancouver and London have been the beneficiaries.”

    I hardly see the over-stimulation of an already impossible property market by chinese investors as being ‘beneficial’. Of course that’s a matter of perspective, but a market where first home buyers are incapable of entering has to be seen as a problem.

    Also, with all those ‘un’s, it’s difficult to look at any western economy that the same labels can’t be applied to, again according to perspective. Australia’s over-reliance on resources, China, and some ridiculous idea that ever growing house prices are somehow a good thing, or even worse, the 10 to 15 years of growth through the 90’s and 2000’s on the back of a credit card binge that virtually defined unsustainable ……………..

    Beuaty is in the eye of the beholder, China’s economy is no more on the brink than every other, it’s all a house of cards if you have eyes to see.

    And yes, a good proof read would have been useful.

  5. Dogs breakfast

    I knew there would be at least one spelling mistake in my comment when I suggested a good proof read. (if my previous comment ever gets posted)

    Does everyone else have every third or fourth comment ‘awaiting moderation’, or am I some sort of labelled trouble-maker that crikey keeps a close eye on?

  6. JohnB

    From the first two sentences:
    GDP increases by 7.7% year on year.
    The Chinese economy continues to slow.

    Goodness, man! If the economy shrank by 7.7%, that would indeed be a slowing.

    What we are fretting about is an economy, far from slowing, is going gangbusters and has done so for decades.

    The actual RATE INCREASE OF THE GDP has declined from 7.8 to 7.7 percent, but that is simply noise on a signal of continuing growth.

    The remainder of the article is a mixture of aphorisms and straight-out tosh, but what more can be expected after such a misguided start?

  7. Jimmyhaz

    At least this economically literate and totally responsible government we currently have in power will replace the flag in Chinese demand with a domestic spending program designed to keep the economy humming along at its current rate.

    Oh wait…

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