Australia and China Job Markets Sharing Destiny

The last time Australia was mired in recession, Boris Yeltsin had yet to stand on a tank in Moscow, and the Clinton era hadn’t begun. In 1991, Australian trade with China was a modest A$3.6 billion (about the same in U.S. dollars). In the preceding decade unemployment had averaged 7.8 percent, as Australia struggled to develop tourism and other services to diversify growth.

The urbanization of hundreds of millions of people in China changed that: Demand in the world’s most populous nation for Australian iron ore and coal spurred a more than 33-fold increase in trade between the two countries to a recent A$121 billion. The Australian jobless rate is down to 5.1 percent.

This prosperity is now threatened. Chinese Premier Wen Jiabao in March reduced his government’s growth target to 7.5 percent for this year, the lowest since 2004, as policymakers seek to reduce the role of large-scale investments in favor of stimulating greater consumer demand. On Sept. 9, President Hu Jintao told an Asia Pacific Economic Cooperation forum in Vladivostok, Russia, that China’s “economic growth is facing notable downward pressure” due to a slowdown in exports. The price of iron ore, Australia’s most lucrative export, has tumbled 25 percent since June 30…

Full Article: As China Slows, Australia Feels the Pain
http://www.businessweek.com/articles/2012-09-13/as-china-slows-australia-feels-the-pain