News / Economy

    Will Australia Feel the Economic Chill From China’s Slowdown?

    FILE - Land being developed for the new home construction is pictured at sunset in southern Sydney, Australia.
    FILE - Land being developed for the new home construction is pictured at sunset in southern Sydney, Australia.
    Phil Mercer

    China's growth rate has slipped to its lowest level in 25 years and there are growing concerns in countries that have relied on its booming economy.  Analysts fear that Australia, which has prospered from exports of natural resources to China, could follow other resource-dependent economies into recession.

    Since the global financial crisis, the world has largely been reliant on China for economic growth.  But falling Chinese demand has led to a sharp fall in the price of commodities, including iron ore and coal, which have sustained the Australian economy.

    Andrew Charlton, the head of consultancy firm AlphaBeta, said a slowdown in China is bad news for Australia.

    “China accounts for nearly 50 percent of all globally-traded commodity demand and that means that if you're a commodity exporter, you are in line for a recession. Canada is in recession. Brazil is in one of the worst recessions in its modern history and you would have to think that Australia is in that same firing line,” said Charlton.

    Australia has ambitions to overtake Qatar as the world’s biggest producer of liquefied natural gas, or LNG, and has invested heavily in export infrastructure.  Markets in China, India and Japan have been targeted for exports, but prices for LNG have collapsed.

    Tim Buckley, director of Energy Finance Studies Australasia, a research body, described recent investments in LNG facilities.

    “LNG prices into Asia are down 60 percent. So Australia, in Queensland has just invested A$60-$70 billion (about US$42-50 billion) of capital investment to build the world's largest LNG export facilities, and literally as we're just turning them on as a country, the price of that product has just collapsed 60 percent,” said Buckley.

    China-Australia tradeChina-Australia trade
    x
    China-Australia trade
    China-Australia trade

    Tourism, another one of Australia’s key sectors, is also nervous about the economic uncertainty in China.

    Last year, one million Chinese visitors came to Australia, a 22 percent increase from 2014.

    But Anna Cook, who runs tours in Melbourne, is anxious about the future.

    “I do worry. I think this time next year will tell, but there's no sign of it just yet. And you'd never know whether the statistics you are reading, whether they are true or whether it's perhaps panic-driven,” said Cook.

    Despite the slowdown, Tim Harcourt, an economist at the University of New South Wales Business School believes that China will continue to underpin Australia’s future prosperity.

    A decade-long resources boom may be fading, he said, but other sectors of the Australian economy are cashing in on demand from China.

    “Australia has sort of moved from the mining boom to the dining boom because we have seen a boom in agricultural exports, and in some ways we have been helping to build the ‘great mall of China.’  A lot of our services and construction exporters have been helping to build the second and third-tier cities in western China.  I think that is part of the next wave of engagement with China from Australia,” said Harcourt.

    FILE - A worker walks near conveyer belts loaded with iron ore at the Fortescue Solomon iron ore mine located in the Valley of the Kings, around 400 km (248 miles) south of Port Hedland in the Pilbara region of Western Australia.
    FILE - A worker walks near conveyer belts loaded with iron ore at the Fortescue Solomon iron ore mine located in the Valley of the Kings, around 400 km (248 miles) south of Port Hedland in the Pilbara region of Western Australia.

    Harcourt believes the recently-signed Trans-Pacific Partnership, or TPP, will likely help Australian exports, but not at the expense of trade with China.

    Australia is one of a dozen countries that are part of the TPP, while China is not.  

    “I think strategically Japan and the U.S. wanted to show that they were important leaders in the region, and I think that is part of the TPP story but for the most part I think what the TPP will probably do is eliminate some of the agricultural tariffs and protection that we have seen in Japan and Southeast Asia for a long time and that could of benefit to Australia, but it is unlikely to divert much trade away from China,” said Harcourt.

    China is Australia’s biggest trading partner.  Last year, commercial ties between the two counties were strengthened when a historic free trade agreement was signed.

    You May Like

    Chechen Suspected in Istanbul Attack, but Questions Remain

    Turkish sources say North Caucasus militants involved in bombing at Ataturk airport, but name of at least one alleged attacker raises doubts

    With Johnson Out, Can a New ‘Margaret Thatcher’ Save Britain?

    Contest to replace David Cameron as Britain’s prime minister started in earnest Thursday with top candidates outlining strategy to deal with Brexit fallout

    US Finds Progress Slow Against Human Trafficking in Africa

    Africa continues to be a major source and destination for human trafficking of all kinds -- from forced labor to sexual slavery, says State Department report

    This forum has been closed.
    Comment Sorting
    Comments
         
    by: Marcus Aurelius II from: NJ USA
    February 12, 2016 1:48 PM
    Ghost cities with 64 million empty unsellable apartments and houses, hundreds if not thousands of empty office towers, vast overcapacity in manufacturing, all worthless projects that go into China's GDP calculations. But China is about to embark on even more crazy useless monster capital projects. Not just Jing Jin Ji, a 130 million population supermagalopolis but a "silk road" railroad project that will link China with Madrid Spain by rail. Forget the impossible technical hurdles, conditions of bad weather, and political instabilities that will plague this project.

    A train can carry maybe 100 shipping containers, 200 if they are double stacked. The largest current freighter can carry 19,000 and many likely can carry ten thousand. That's the equivalent of at least 50 or more train trips for the Silk Road Train to cut transit time in half for each one. What's the projected return on investment? None, it will be a total loss. But China will have to buy a lot of raw materials from places like Australia to build it. And just when you thought China's economic planners couldn't get any stupider.

    Where time of delivery is off the essence, critical shipments can be air freighted in a matter of hours, not weeks. Never have so few thrown away so much money so fast.

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    Clinton Leads Trump, But Many Voters Don't Like Eitheri
    X
    Jim Malone
    June 29, 2016 6:16 PM
    In the U.S. presidential race, most recent polls show Democrat Hillary Clinton with a steady lead over Republican Donald Trump as both presumptive party nominees prepare for their party conventions next month. Trump’s disapproval ratings have risen in some recent surveys, but Clinton also suffers from high negative ratings, suggesting both candidates have a lot of work to do to improve their images before the November election. VOA National correspondent Jim Malone has more from Washington.
    Video

    Video Clinton Leads Trump, But Many Voters Don't Like Either

    In the U.S. presidential race, most recent polls show Democrat Hillary Clinton with a steady lead over Republican Donald Trump as both presumptive party nominees prepare for their party conventions next month. Trump’s disapproval ratings have risen in some recent surveys, but Clinton also suffers from high negative ratings, suggesting both candidates have a lot of work to do to improve their images before the November election. VOA National correspondent Jim Malone has more from Washington.
    Video

    Video Slow Rebuilding Amid Boko Haram Destruction in Nigeria’s Northeast

    Military operations have chased Boko Haram out of towns and cities in Nigeria’s northeast since early last year. But it is only recently that people have begun returning to their homes in Adamawa state, near the border with Cameroon, to try to rebuild their lives. For VOA, Chris Stein traveled to the area and has this report.
    Video

    Video New US Ambassador to Somalia Faces Heavy Challenges

    The new U.S. envoy to Somalia, who was sworn into office Monday, will be the first American ambassador to that nation in 25 years. He will take up his post as Somalia faces a number of crucial issues, including insecurity, an upcoming election, and the potential closure of the Dadaab refugee camp in Kenya. VOA’s Jill Craig asked Somalis living in Kenya’s capital city Nairobi how they feel about the U.S. finally installing a new ambassador.
    Video

    Video At National Zoo, Captivating Animal Sculptures Illustrate Tragedy of Ocean Pollution

    The National Zoo in Washington, D.C., is home to about 1,800 animals, representing 300 species. But throughout the summer, visitors can also see other kinds of creatures there. They are larger-than-life animal sculptures that speak volumes about a global issue — the massive plastic pollution in our oceans. VOA's June Soh takes us to the zoo's special exhibit, called Washed Ashore: Art to Save the Sea.
    Video

    Video Baghdad Bikers Defy War with a Roar

    Baghdad is a city of contradictions. War is a constant. Explosions and kidnappings are part of daily life. But the Iraqi capital remains a thriving city, even if a little beat up. VOA's Sharon Behn reports on how some in Baghdad are defying the stereotype of a nation at war by pursuing a lifestyle known for its iconic symbols of rebellion: motorbikes, leather jackets and roaring engines.
    Video

    Video Melting Pot of Immigrants Working to Restore US Capitol Dome

    The American Iron Works company is one of the firms working to renovate the iconic U.S. Capitol Dome. The company employs immigrants of many different cultural and national backgrounds. VOA’s Arman Tarjimanyan has more.
    Video

    Video Testing Bamboo as Building Material

    For thousands of years various species of bamboo - one of the world's most versatile plants - have been used for diverse purposes ranging from food and medicine to textiles and construction. But its use on a large scale is hampered because it's not manufactured to specific standards but grown in the ground. A University of Pittsburgh professor is on track to changing that. VOA’s George Putic reports.
    Video

    Video Orphanage in Iraqi City Houses Kids Who Lost their Parents to Attacks by IS

    An orphanage in Iraqi Kurdistan has become home to scores of Yazidi children who lost their parents after Islamic State militants took over Sinjar in Iraq’s Nineveh Province in 2014. Iraqi Kurdish forces backed by the U.S. airstrikes have since recaptured Sinjar but the need for the care provided by the orphanage continues. VOA’s Kawa Omar filed this report narrated by Rob Raffaele.
    Video

    Video Re-Opening Old Wounds in a Bullet-Riddled Cultural Landmark

    A cultural landmark before Lebanon’s civil war transformed it into a nest of snipers, Beirut’s ‘Yellow House’ is once again set to play a crucial role in the city.  Built in a neo-Ottoman style in the 1920s, in September it is set to be re-opened as a ‘memory museum’ - its bullet-riddled walls and bunkered positions overlooking the city’s notorious ‘Green Line’ maintained for posterity. John Owens reports from Beirut.
    Video

    Video Brexit Resounds in US Presidential Contest

    Britain’s decision to leave the European Union is resounding in America’s presidential race. As VOA’s Michael Bowman reports, Republican presumptive nominee Donald Trump sees Britain’s move as an affirmation of his campaign’s core messages, while Democrat Hillary Clinton sees the episode as further evidence that Trump is unfit to be president.
    Video

    Video NASA Juno Spacecraft, Nearing Jupiter, to Shed Light on Gas Giant

    After a five-year journey, the spacecraft Juno is nearing its destination, the giant planet Jupiter, where it will enter orbit and start sending data back July 4th. As Mike O'Sullivan reports from Pasadena, California, the craft will pierce the veil of Jupiter's dense cloud cover to reveal its mysteries.
    Video

    Video Orlando Shooting Changes Debate on Gun Control

    It’s been nearly two weeks since the largest mass shooting ever in the United States. Despite public calls for tighter gun control laws, Congress is at an impasse. Democratic lawmakers resorted to a 1960s civil rights tactic to portray their frustration. VOA’s Carolyn Presutti explains how the Orlando, Florida shooting is changing the debate.

    Special Report

    Adrift The Invisible African Diaspora

    World Currencies

    EUR
    USD
    0.9007
    JPY
    USD
    102.72
    GBP
    USD
    0.7444
    CAD
    USD
    1.2956
    INR
    USD
    67.519

    Rates may not be current.