The ever growing Chinese debt is the greatest risk to Australia the Reserve Bank of Australia Governor said, as the two countries economies become more entwined more industries are at risk. China is now Australi’as largest trading partner.
The ever growing Chinese debt is the greatest risk to Australia the Reserve Bank of Australia Governor said, as the two countries economies become more entwined more industries are at risk. China is now Australia’s largest trading partner.
Ever since the global financial crisis China’s total debt has exploded from 100 percent of gross domestic product (GDP) in the late 1990s to around 260 percent today. There is also the question of the unknown with shadow banking in China.
China is Australia’s largest trading partner, taking a third of its exports and accounting for one fifth of Australia’s imports The Reserve Bank of Australia Governor Philip Lowe voiced his concern during a speech in Sydney on Wednesday.
.”Among the largest economic risks that Australia faces is something going wrong in China, and perhaps the single biggest risk to the Chinese economy at the moment lies in the financial sector and the big run-up in debt there over the past decade.” Lowe said
Many they think of Australia as nothing more than a commodity boat to China however the trade relationship is not just resource exports but tourism, education and agricultural shipments.
“In many individual categories, we now export more to China than any single other destination. So what happens in China is now directly relevant to a broad spectrum of Australian industries.” Lowe added
Australia welcomed some 1.4 million Chinese visitors last year, up from about 400,000 a decade earlier.
There are almost 200,000 Chinese students currently study in universities in Australia which is around one third of foreign students in Australia. The export picture to China is changing as the Chinese middle class grows. Wine, dairy exports, vitamins and pharmaceuticals are just some of the new markets.
“What happens in China is important to Australia, and to the broader global community. We will, of course, have differences from time to time, but we will surely be better placed to deal with these if we understand one another well,” Lowe said.
“Building strong connections across business, finance, politics, academia and the community more generally is important to deepening this understanding.” Lowe concluded
From a sunburnt country