Chinese Slowdown Effect On Australian Economy
This report is about the impact of Chinese slowdown on Australian economy in 2015-2016. China and Australia were good trading partner from many years but now there is decrease in their trading. In this report we discussed the long term and short term impact on Australian economy due to reduction in the exports to china. Then we discussed the impact of exports and the intervention of government in the Australian economy. We also discussed the monetary policy and the tools for monetary policy through which the reserve banks controls the money supply and the inflation rate. In last part we discussed the impact of monetary policy on the liquidity of Australian economy.
Chinese Slowdown Effect On Australian Economy Background of Australia and China trade
China is the largest trading country of the world. Austria has major trading with china since many years. Bilateral trade expanded among Australia and China by the establishment of diplomatic relation many years ago (Gill 2010). China became the largest trading partner of Australia because of the high demand of coal, iron ore and liquefied natural gas. China imports most of the mining products from Australia therefore large mining companies of Australia rely on China. Other than China some other countries like India also are the big trading partners of Australia (Bliss 2012). China exports computers, telecommunications equipment, sporting equipment, toys, clothing and prams to Australia. Australia exports services and raw material to china. Manufacturing sector of China capturing almost 59% of GDP of China. Other than raw material and services China also imports wool, meat, nickel, coal, and iron ore from Australia for manufacturing sector. China imports and consumes almost 30% of Exports of Australia. The bilateral trading between China and Australia faces some problems since few years. The economy of China is going slowdown and importing less raw material and other mining products from Australia (Anderson and Strutt 2014). The reduction in exports of Australia has a large effect on Australian economy. The decreases in trading between China and Australia, giving opportunity to Australia to develop new market by trading with other countries. Australia is developing new trading market with Japan and South Korea. Due to reduction in the oil prices during 2014, which decreases the prices of Australian commodities. The economist was assuming that the GDP of Australia will increase in future but in 2015 the GDP of Australia decreased.