If you want to get some insight into the culture of thinking about China (and economics more broadly) at the Reserve Bank of Australia (RBA) then have a listen to deputy governor Guy Debelle at a luncheon on Friday in which he uses three straw man arguments to marginalise views that China is of concern to the Australian economy. I’m not sure Debelle is even aware of his rhetoric (as opposed to argument) but it leads directly to a public discussion that is framed as bulls versus bears or optimists versus pessimists etc, which is the driver of black and white outcomes instead of subtle and risk-insured policy.
One can only shake one’s head when the RBA stands up in public and declares that it “expects China to keep slowing” and goes out of its way to emphasise instead Japan, Korea and domestic demand. For the past five years, the bank’s policy choices have been dominated by the exact opposite assumption: that China will grow forever, that there is no over-investment, that the commodity boom is permanent and that the Australian economy should, therefore, undergo a structural adjustment to a higher dependence upon commodity exports.
I’m afraid to say for anyone that pays attention over time, Debelle’s address was defensive and unconvincing and rather begs the question about intellectual integrity at the bank. If you got it wrong, you should say so.
Very disappointing stuff.
