ECO201A The Strong Economic Relation Between China and Australia
Choose two of the following questions:
2. One of the tools Australia and many other countries have used to fight the recession trends was to cut cash rates. The Reserve Bank of Australia has itself cut the cash rate from 6.75% in January 2008 to 2% in January 2016. Why do you believe central banks all over the world are using this tool to fight the recession in their economies Do you
believe it has been efficient in Australia and globally.
3. Many governments have increased their government debt when fighting the economic slowdown. Why governments have spent more and even got into debt in order to fight the slowdown in economy Do you believe it is an efficient tool in order to fight recession trends When the Government debt can become a national problem Give
an example of a country where the government debt has caused major issues within its economy. Do you believe that the government debt is a real issue in Australia.
4. Analyse and explain why the Australian federal budget went from expected $19.7b surplus in January 2008 to the expected $35.1b deficit in January 2016? Can this be a real issue in a long run Analyse and explain why yes or no.
5. As per the article, the unemployment rate has risen from 4.2% to 5.8%. Do you believe the rise in the unemployment rate is a real reflection of unemployment in Australia Explain why yes or no with the reference to the unemployment rate measurement process. How is Australia doing with post GFC unemployment levels comparing to the rest of the world How is Australian Government addressing the unemployment issue at the moment.
6. The article has mentioned the slow down in the Chinese economy and its impact on Australia. Why do you believe Australia cares so much about what is happening in China What is the connection to the Australian economy Give examples from history where you can demonstrate the impact of Chinese economy on Australian economy.
Which areas of the Australian economy are usually impacted.
Answer:
The strong economic relation between China and Australia interconnects economic prosperity of two nations. China’s growth phase since 1970 not only advanced Chinese economy but also fueled economic growth of Australia as well. Today, China is the most important trading partner both in terms of export and import (Groenewold, 2018). The importance of China’s economy on Australian economy can be realized in the following aspects.
China as a destination of Australian commodities
The manufacturing and urbanization driven China’s growth pulled up resource demand from Australia. This was one primary factor contributing to mining boom in Australia. China now has shifted its growth strategy from an urbanization and manufacturing driven growth to a strategy relying on domestic consumption and set of more complex goods and services. In the transition phase China experienced a relatively slow growth rate.
This will moderate the demand for Australian export (Martin, 2018). This will cause a decline in Australia’s terms of trade because of growth in minerals in Australia and rest of the world. As a result, Australian dollar will be depreciated. The adverse effect on Australian economic growth in turn affects the standard of living of people in Australia.
As shown from above two figures China is the most important export destination of Australia with major export being Iron ore, coal and natural gas.
As represented from the two above graph China’s import of iron ore and coal increased sharply from 2005 onwards. Due to global economic crisis, import of both the minerals though have declined but it recovered soon and again constituted a rising trend (Aph.gov.au., 2018). China’s economic slow-down marked a decline in both coal and iron ore import.
China’s slow down creates huge pressure on Australian steel industry. The price of exported commodities experienced a sudden decline (Martin, 2018). This hurt Australian export and the entire economy.
The decline in price and share of Australian export in turn caused the value of Australian dollar to fall. Dollar value has decline both in nominal and real terms.
China as an investor
Foreign investment plays an important role in economic growth of Australia. China is one major investor of Australia. China accounts 3% of total foreign investment in Australia (Aph.gov.au., 2018). The investment from China increased at a rapid rate. China’s business was keen to invest in Australia which contributed to economic growth of the nation. China’s fund was mostly invested in infrastructure project.
Businesses in Australia largely benefitted due to a relatively low interest rate that had been mainly driven by availability of China’s fund for lending (Cashin, Mohaddes & Raissi, 2017). The sluggish growth rate of China led to a decline in China’s investment in Australia. China’s investment to Australia accounted a decline by 11%. Investment declined to USD 10.3 billion in 2017 (businessinsider.com.au, 2018). The contraction in investment occurred because of China’s decision to break foreign investment. Following a slow economic growth China squeezed foreign investment to restrict flow out of cash from the economy.
The sector recorded decline in foreign investment include oil & gas, commercial real estate, renewable energy and food and agribusiness investment. The declining trend in investment has been projected be continued in the upcoming years. Investment in sectors that relates to consumer demand in China and other fields that government has prioritized.
Collapse of China’s share market further affects stock market in Australia. The fluctuation in stock prices in turn affects confidence of the investors (Martin, 2018). The slow-down in China’s economy and associated slow-down in external demand for Australian goods and services will continue to stagger economic growth of Australia.
References List
International Trade - Australian Bureau of Statistics.
Australia’s economic relationships with China – Parliament of Australia. Retrieved from
Australia’s export performance in 2014-15 - Austrade.
businessinsider.com.au. (2018). Beijing's crackdown on overseas investment has hit Australia hard.
Cashin, P., Mohaddes, K., & Raissi, M. (2017). China's slowdown and global financial market volatility: Is world growth losing out?. Emerging Markets Review, 31, 164-175.
Groenewold, N. (2018). China's ‘New Normal’: How will China's Growth Slowdown Affect Australia's Growth?. Australian Economic Papers.
Martin, P. (2018). Australia has few tools left to fight recession, warns leading forecaster Stephen Anthony.
Buy ECO201A The Strong Economic Relation Between China and Australia Answers Online
Talk to our expert to get the help with ECO201A The Strong Economic Relation Between China and Australia Answers to complete your assessment on time and boost your grades now
The main aim/motive of the management assignment help services is to get connect with a greater number of students, and effectively help, and support them in getting completing their assignments the students also get find this a wonderful opportunity where they could effectively learn more about their topics, as the experts also have the best team members with them in which all the members effectively support each other to get complete their diploma assignments. They complete the assessments of the students in an appropriate manner and deliver them back to the students before the due date of the assignment so that the students could timely submit this, and can score higher marks. The experts of the assignment help services at urgenthomework.com are so much skilled, capable, talented, and experienced in their field of programming homework help writing assignments, so, for this, they can effectively write the best economics assignment help services.
