Australian Opportunities through the Chinese Structural Transformation

Abstract

China is now Australia's largest trading partner, continuing to increase its relative importance. Its growth and structural change have been the major determinants of the conditions under which Australia relates to global markets for goods, services and capital. China has been a labour surplus economy. Over the past half-dozen years, China has entered the 'turning point' in economic development, in which labour becomes scarce, real wages rise rapidly, the surplus of savings over investment falls and there is some easing of growth rates in sectors that use resources intensively. This changes the nature of Australian opportunities in China.

The contemporary China resources boom*

“…This is the transition from a labour surplus economy with comparative advantage in labour-intensive products, to an increasingly diverse economy, with diverse comparative advantage centred upon capital-intensive and technologically sophisticated products (Cai 2010;Garnaut 2010 and other contributions to the special issue of the China Economic Journal, vol. 3, July 2010, Garnaut 2011c.…”