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China will become Australia's most important economic partner in history in the next two decades. Growth 55: China in Australia's Future shows that our relationship with China as the potential to strengthen our economy over the coming 50 years. The opportunities for Australia and Australian businesses in China dramatically outweigh the risks, and we need to escalate our engagement with China sooner rather than later.
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Report highlights
Opportunities for Australia
As one of the world's most service-oriented economies, Australia is well-placed to serve China in fields such as property and business services, communications, finance and insurance, transport and education. Australia's largest organisations will find it easiest to operate at Chinese scale.
Australia, with its commodities and services, is strongest just where China is weakest. Demand for food, energy, industrial raw materials, services and intellectual property is rising.
China's internal economy is expected to develop rapidly over the coming decades. This represents a huge opportunity for Australia in markets such as food and tourism.
The long-run change
China's rise in the last decades of the 20th century and the early 21st century represents a re-emergence. China was 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.
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
China's exports and imports both grew from 1 per cent to well over 5 per cent of world trade between 1980 and 2004. China is becoming Australia's "super-customer". It has already reversed a decades-long decline in Australia's terms of trade (the ratio between our export and import prices) and driven them to a 30-year high.
China's growth has been driven by manufactured goods, as it becomes "the world's factory". Much of that growth has been driven by foreign investment, particularly from Hong Kong and Taiwan. China remains heavily dependent on the outside world for design and componentry. But China is now starting to compete in higher-value-added manufactures.
About the report
The report was launched by the Shadow Minister for Foriegn Affairs and International Security, Kevin Rudd.
CEDA's partners on China in Australia's Future were HSBC, Rio Tinto and Deacons.