Australia warned of China economy danger

Bank of China

Former Australian prime minister John Howard has warned Australia not to become mesmerised by China, and instead focus on maintaining an efficient and productive economy.

In a major speech to the Australian Chamber of Commerce in Shanghai, Mr Howard said he believed Australia must stay diversified and not become reliant on the mining industry.

China is Australia’s largest trading partner, with trade between the two nations now up to $US130 billion a year.

It is also the largest buyer of Australian commodities, but demand could fall sharply if China’s economy starts to weaken.

Mr Howard also said there were transmission risks for the Australian economy as China developed and its economy modernised.

“That is why it’s important to have a developed economy, it’s important not to get mesmerised by China,” he said.

“At the same time, we have to make sure we don’t squander the natural advantages that we have.

“We have to accept Australia and China have different historical and political systems and we have to appreciate the differences that exist between both nations.”

The Labor government has been criticised for not having capitalised on the full benefits of the China boom in the past few years.

China’s new government has set the official growth target for its economy this year at 7.5 per cent.

However, a growing number of economists believe China could miss the official target for the first time in 15 years.

In the speech Mr Howard criticised the Labor government’s endorsements of the Asian Century white paper that suggested corporate boards set a quota of having at least 30 per cent of their directors who had worked in Asia.

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