Aussie benefits

Australia is once again benefiting from the rise of a new economic power in Asia. Half a century ago, it gained from trade with Japan, which eventually purchased 80% of Australia's iron-ore exports alone.

by Far Eastern Economic Review
Last Updated: 23 Jul 2013

In 2005/06, China became Australia's second biggest export market and the rise in prices of its raw materials (principally, coal and iron ore) has been the primary cause of the impressive rise in Australia's terms of trade with China (the ratio between the price Australia receives for its exports and the price it pays for its imports), which has shot up by about a third over the past three years.

With the terms of trade 50% above the average of the 1990s, this implies a lift to Australian income of about 10%. The boom does, however, create some economic management challenges for Australia, not least the distortion of the domestic economy in the minerals and energy industry, which benefits some states more than others.

Aussies surf China's economic wave
Mark Thirlwell
Far Eastern Economic Review, Vol 170 No 1, January/February 2007

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