RBA and Australia Treasury Sees China Growing By 7.5%

Australian policy makers see little evidence of a slump in China’s economic growth, defying global pessimism that helped wipe $1.6 trillion from stocks this year.

The Reserve Bank of Australia and the nation’s Treasury forecast the world’s second-largest economy will expand 7.5 percent this year. The view is underpinned by a 21 percent expansion in Australia-China trade to a record A$141.8 billion ($127 billion) in 2013, led by shipments of iron ore, a key ingredient of the steel used to build the skyscrapers, subways and bridges transforming China’s cities.

Chinese Premier Li Keqiang has set a “bottom line” of 7 percent growth in gross domestic product as his leadership team seeks to engineer a transition to consumption from investment-led expansion. At the same time, Chinese authorities are stepping up efforts to rein in financial risks and squeeze speculative lending as concerns mount that a surge in borrowing over the last five years will tip the country into crisis.

“We’re really only seeing early signs, but consumption is a somewhat higher share of GDP than it was, and I would expect that trend to continue,” said John Edwards, an RBA board member who described himself as among the optimists. “China is effecting a bit of a transition and that’s also apparent in the shrinkage of its current account surpluses. A somewhat smaller contribution from net exports now than was true two to three years ago.”


This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Mingze Wu

Mingze Wu

Currency Analyst at Market Pulse
Based in Singapore, Mingze Wu focuses on trading strategies and technical and fundamental analysis of major currency pairs. He has extensive trading experience across different asset classes and is well-versed in global market fundamentals. In addition to contributing articles to MarketPulseFX, Mingze centers on forex and macro-economic trends impacting the Asia Pacific region.
Mingze Wu