Rio Tinto chairman Jan du Plessis was upbeat on the prospects of China changing economic gears, relying on consumer spending rather than capital spending, as he warned of "bad and lazy habits" that have emerged in Australia amid stagnation in Europe.
"The strength of the resources boom has masked the weakness of a slowdown in productivity improvements," he warned at a business luncheon on Friday.
"Australia now needs to rebuild competitiveness and productivity."
Mr du Plessis called for co-operation across all levels of government to achieve the necessary reform. "I am afraid ... there are no short cuts," he said, while praising the new federal government.
"I must admit, I like what I see," he said after visiting Canberra this week for meetings.
The Rio chairman said Australia had moved from being the miner's lowest-cost operations to the highest, while conceding much of this shift was due to the movement of the currency.
The "great divergence" that saw China left behind as Europe developed during the industrial revolution "has become the great convergence, with the East rapidly regaining ground", he said.
During the 1990s, China's industrialisation contributed to the long period of strong economic growth in Europe and North America, he said, without fuelling inflation.
"Increasingly, the wellbeing of the global economy depends on Asia in general and on China in particular," he said.
"The good news is that China's economy continues to grow and between July and September, GDP rose by 7.8 per cent [and] signs of a consumption-led economy are beginning to emerge.
"Beijing is steering its economy through a major transformation - towards growth eventually being led more by domestic consumption than exports and investment ... reform will gain momentum."
Mr du Plessis also warned Europe has seen little improvement in its underlying "fundamental economic imbalances ... [making] it difficult to reach sustainable solutions over the long-term".