The opportunities available to Australia and Australian businesses in China dramatically outweigh the risks, and Australia should continue to lift its level of engagement with the country.
These are CEDA's conclusions based on its Growth Report Number 55, China in Australia's Future.
"Within a decade or two, China is set to become the most important economic partner in Australia's history," says CEDA chief executive David Edwards. "That will likely happen regardless of whether China's recent growth slows in the next few years."
"And well after that, China will continue to become more important to Australia."
"The relationship goes far beyond trade and investment. The ties produced by education and immigration will also strengthen the link."
Mr Edwards says most Australians still do not grasp China's potential to strengthen the Australian economy over the coming 50 years.
"In at least one scenario, China will replace the US as the world's largest economy in the 2040s," he says.
"Young people starting work today may well be dealing with China as the world's largest economy well before they retire."
And unlike the US economy, the Chinese economy strongly complements Australia's, says Mr Edwards.
"China is becoming the world's factory, but it has huge needs for resources and for services. These are just the areas where Australia has most to offer."
"China's economic relationship with Australia has already produced a historic reversal in our terms of trade. But there is the potential for even more dramatic change in the decades ahead."
Mr Edwards says Australian governments and businesses need to focus on the scale of the opportunity and then apply good diplomatic and business analysis. "We don't need to be starry-eyed. The game is how to manage the risks and take advantage of the opportunities."
Those opportunities extend far beyond energy and resources, the main focus of today's Australian exports to China. The report shows that opportunities exist in fields as diverse as food, tourism, education and property services - and even in manufacturing.
"There are real opportunities for partnership in higher-value-adding areas of manufacturing," says Mr Edwards.
The long-run change
The report notes that China's rise in the last decades of the 20th century and the early 21st century represents a re-emergence. China was easily the world's largest economy for most of the past 1500 years; as recently as two hundred years ago, it accounted for perhaps one-third of global economic output. In the 21st century, it is poised to assume something like that importance again.
But in sharp contrast to much of the previous millennium, 21st-century China will most likely trade aggressively with the rest of the world as both producer and consumer.
Most East Asian economies are restructuring their economies to benefit from China's expansion (John Edwards). As a major resources exporter and manufactured goods importer, Australia more than most advanced economies has an opportunity to build a complementary relationship with China through the coming decades.
The dimensions of growth
The effects of growth
These and other graphics are available in the body of the report.
Note to graphics editors: spreadsheets containing source data are available on request.
A PDF-format copy of CEDA's Growth Report Number 55, China in Australia's Future, is attached to this release.
China in Australia's Future is sponsored by HSBC, Deacons and Rio Tinto.
The report will be launched at 12.30 pm on Wednesday, May 18 at a CEDA China seminar in Sydney.
Julie Burke
Acting conference director
Phone: (02) 9299 7022 or 0428 261 262
Email: julieb@ceda.com.au
For further information please contact:
John Harris
Corporate Relations Director
Phone 03 9652 8415
Email info@ceda.com.au
Printed from the CEDA Web site at http://ceda.com.au. Copyright 1999-2009 CEDA