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International Monetary Fund. Asia and Pacific Dept

future, meaning that Australia is also increasingly exposed to the risks China faces during its transition process. The scenario analysis below will attempt to explore in more detail the increased importance of the Australia-China linkages, and provide the policymaker with key results highlighting the likely effects of increasing ties and possible risks on the Australian economy. C. Upside Scenario 1 – Higher Chinese Household Spending on Tourism and Education Takeaway : Understanding the structure of the shock to China is as important as the outcome of the

Mr. Philippe D Karam and Mr. Dirk V Muir
China and Australia have increasingly strong links, especially through trade. These are driven by demand from China for Australian commodities (coal and iron ore) and services (tourism and education). These links are influenced by China’s transition to a services-driven, consumer-led economy. Using ANZIMF, the Australia-New Zealand Integrated Monetary and Fiscal model, three risks (both upside and downside) to China during this transition process are considered, focusing on their spillovers to Australia. One simple takeaway is central to each risk – while the real GDP response to shocks in Australia typically is small, responses in demand components or sectors are usually much larger– along with three further takeaways, all of which help in the analysis of Australia in relation to any risk emanating from China.
Mr. Philippe D Karam, Mr. Dirk V Muir, and Mr. Thomas Helbling

, meaning that Australia is also increasingly exposed to the risks China faces during its transition process. The scenario analysis below will attempt to explore in more detail the increased importance of the Australia-China linkages, and provide the policymaker with key results highlighting the likely effects of increasing ties and possible risks on the Australian economy. III. Upside Scenario 1 – Higher Chinese Household Spending on Tourism and Education Takeaway : Understanding the structure of the shock to China is as important as the outcome of the shock in

International Monetary Fund. Asia and Pacific Dept
This Selected Issues paper on Australia discusses prospects and ramifications of China’s economic transition. Australia and China have strong linkages that are growing over time as China carries on with its economic transition. Trade in commodities and services are constantly growing. Australia has established itself as a dominant player in some key Chinese import needs, particularly for steel. The stylized facts also demonstrate that the rest of Asia is increasingly important for Australia. The charts for tourism, education, and the destination of exports illustrate that both advanced and emerging Asia already have a growing impact. The paper shows that the rest of Asia’s trade linkages with Australia are similar in size to the linkages between Australia and China. China may be Australia’s largest trading partner, but the rest of Asia is also a rapidly growing region, with potential markets for Australian expansion.