THE Treasury chief, Martin Parkinson, is still bullish on China’s growth prospects, saying the country is on track to overtake the US as the world’s largest economy by the end of this decade.
The strength of the Australian economy was tested recently when China’s demand for commodities slumped. The price of iron ore, Australia’s most important export, fell as low as $US86.70 per tonne in September from a record high of $US172.60 last year.
The twin engines of Chinese economic growth – industrialisation and urbanisation – still had some ‘‘considerable way to run’’, Dr Parkinson said in a special edition of Treasury economic papers on China.
He said Australia would not be immune to a serious downturn in China but the country was well positioned to ride out any storms.
‘‘We have a proven record of coping with slowing growth in key export markets such as Japan and other external shocks such as the Asian financial crisis and global financial crisis.’’
The government’s chief economic advisor has also ventured outside the realm of economics and criticised the state of popular debate on whether Australia should choose between its strategic ally, the US, or the largest trading partner, China.
‘‘The US and UK will continue to be important and economic partners for Australia and this will not change any time soon,’’ he said.
He said these two countries were responsible for half of Australia’s total investment stock. China accounts for just 1 per cent.
Dr Parkinson said China’s growth depended on its ability to implement significant structural reforms.