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It has been a common theme on this site that the rebalancing of China’s economy from fixed asset investment (construction) towards consumption would be unambiguously bad for the Australian economy, since it would dramatically reduce demand for Australia’s key export commodities, especially iron ore, which has driven Australia’s resources boom over the past decade (see next chart).
Last week, the Reserve Bank of Australia (RBA) released new research showing how the transition of China’s economy would damage Australia, since “Chinese investment appears to absorb more than twice
as much Australian value-added output as Chinese household consumption”:
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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
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