A respected economist warns that Australia's dependence on mineral exports to China has made its economy highly vulnerable to a crash. Frank Gelber, who is the chief economist at research firm, BIS Shrapnel, says the mining boom has the potential to expose the country to fluctuations in commodity prices and Chinese demand.
China's demand for iron ore, coal and liquefied natural gas has made it Australia's biggest trading partner. With China trade worth about $76 billion a year, Australia was able to avoid the worst effects of the global economic slowdown, prompting hopes that rising commodity exports could fuel growth for years to come.
However, some economists and business experts think Australia relies too heavily on selling resources to China, and is neglecting other parts of the economy.
Frank Gelber, a senior economist at Australian company BIS Shrapnel, expects to see strong growth in Australia over the next five years. But he worries about the risks of structural economic imbalances in the longer term.
"We're running down the rest of the economy, we're specializing in minerals and this is all very nice when we've got very high minerals prices and very strong demand," Gelber said. "But minerals prices don't always boom and demand isn't always strong. The lessons of the last 50 years should have taught us that so that we're setting ourselves up for a huge fall if at some stage we see falls in minerals prices and demand."
The Australian government, however, says trade ties with China are more than just mining exports. Canberra and Beijing have restarted negotiations on a free trade deal that Australia hopes will help its companies take advantage of surging consumer demand in China.
Australia's trade minister says Australian construction, financial and retail companies could have a vital part to play in China.
The trade minister also has said that recent diplomatic tensions with China over the trial of four executives from Anglo-Australian mining giant Rio Tinto would not harm trade ties.
The four, including Stern Hu, an Australian citizen, went on trial Monday in Shanghai on charges of stealing commercial secrets and receiving bribes
The trial is expected to last for three days.
Australian Prime Minister Kevin Rudd has repeated his call for China to ensure that Hu receives a fair trial. Australian officials have expressed concern about the Chinese court's decision to hold part of the trial behind closed doors, so that Australian diplomats can not observe the proceedings.