Australia sees huge future potential in Chinese consumer economy

By Gregory Dimopoulos Source:Global Times Published: 2016-3-22 20:58:01

China will continue to make a sizable contribution to the global economy, as it grows off a much larger base than that of 10 years ago, said Australian Treasurer Scott Morrison recently.

Although Moody's recently downgraded its outlook on Chinese government debt from "stable" to "negative," Morrison believed Moody's is at the same time recognizing the continued strength of the Chinese economy.

"As our No. 1 trading partner, China will continue to present opportunities for Australia to continue to grow our economic prosperity," he told Xinhua.

Morrison noted that China's transition away from China's investment-led growth model to one more reliant on consumption and services is not without risk. "However the authorities appear to have sufficient policy buffers, with which they can support growth and stabilize the Chinese economy, including scope to expand the use of monetary policy; a large household savings buffer; relatively low fiscal deficit; mostly domestic denominated debt; and large foreign exchange reserves of around 3.2 trillion US dollars," he said.

The relationship the Australian economy has with that of China is not one-dimensional, Morrison explained.

"Certainly we have benefited greatly from the resources boom that we have had and what has been here with the production side of economy that is going into the consumption phase now," he said.

Morrison expects that over the long-term, China will rebalance away from the investment-led model that has underpinned its growth for decades toward one more focused on consumption-led growth.

"China has more room for its consumption to grow than just about any country in history. Household consumption contributed just 38.5 percent of GDP in 2015 to 56 percent in Australia and nearly 70 percent in the US," he added. "This means although we are seeing weakening signs in the traditional sources of China's growth, such as heavy industries like steel manufacturing, over the long-term, the rise of consumption within the Chinese economy should continue to support its economic development."

Morrison also noted the transition occurring in the Chinese economy is creating new opportunities for Australia.

"China is already our largest destination for services exports, having increased from around 3 percent of our services exports in 2000-01 around 14 percent in 2014-15."

The author is a writer with the Xinhua News Agency. The article first appeared in Xinhua.

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