‘Panda-monium’ - what does China’s rise mean for the rest of us?

The sixth claim is that China entry into the WTO will cost of the rest of us. This is not so. Trade is a two-way street and China will need the world’s (and the region’s) imports as it grows its own export industries. And it has not been plain sailing for China. According to Cambridge University’s leading China specialist Professor Peter Nolan, “Most of the burden of adjustment from WTO entry is falling on the Chinese people themselves - especially those working in sectors under pressure. This includes land intensive agriculture, capital-intensive heavy industry and domestic financial services providers.”

In Nolan’s analysis of Chinese state owned enterprises (SOEs), he found “Large oligopolistic businesses like the SOEs that don’t respond adequately to price signals will find themselves under intense competitive pressures”.

The entry of China into the WTO is symbolic of the pressure put on China’s domestic economy as it opens up to the world. Economic reform will also require major social adjustments and the development of social safety nets to enable those affected to cope with the massive economic changes already underway.

What does all this mean for Australia?

Despite our historical fears of “tyranny of distance” it may well be that Australia, with China’s surge, is in the right place at the right time. Australia has exactly the right type of products and services that China needs to fuel its industrial expansion. Iron ore, Wool, Crude petroleum, Coal and LNG make up Australia’s massive $10.9 billion export account with Beijing. China is Australia’s third largest trading partner and our second largest merchandise import and export market.

According to Austrade research, there are around 3,245 Australian companies exporting to China. But it’s not just about commodities. According to Australia’s Senior Trade Commissioner to Beijing, Kym Hewett:

We see many small businesses here in China as well as the blue chip corporates. And we expect more services companies over here in the lead up to the 2008 Olympics - particularly in environmental technology, engineering and construction to supplement the strong growth we are seeing in education, tourism and architectural services.

In conclusion, there is no doubt that China’s growth is impressive but it is important not to exaggerate the claims made about the Chinese economy. The opening up of the Chinese economy will mean more exports for China, but also more imports for other nations in Asia. China’s triumph is not a zero sum game - it can benefit other nations too and ultimately improve the lives of the Chinese people. Australia will play an important role in China’s development and as shown in the initial response to a possible Australia-China FTA, the Australian exporter community see closer links with China, as being full of promise and opportunity.