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Keep perspective on exports to China
letter published in AFR, 10 Oct 2008

In times of global financial (and now increasingly economic) crisis Australia naturally looks to those countries that may be able to maintain reasonably steady economic growth. In this context much attention is being given to China, which has been increasing its imports from Australia at a rapid rate and thereby stimulating much investment in our minerals industry.

While it seems a reasonable assumption that Chinese demand will continue to grow, it is important to keep this in perspective. In 2007-08 Japan remained easily our biggest export market (for goods) and that remained the case in the latest two months' published data (about 22 per cent of total exports compared with 15 per cent to China). Even further growth in exports to China may not be sufficient to offset the likely slowing in exports to Japan and other countries over the next year or so.

Also relevant is the relative importance of exports in Australia's national income. In 2007-08 exports of goods (in current prices) increased by about $13 billion or about 7.5 per cent and constituted about 17 per cent of national income (of which exports to China were about 2.5 per cent). In the period ahead we may be fortunate to hold our total exports of goods steady.

Des Moore
Director, Institute for Private Enterprise
South Yarra Vic

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