An extra trillion makes a big difference not only to China but also to its trading partners. A trillion US dollars is worth more than half the Australian economy. Each time China expands, so does its capacity to drag the Australian and New Zealand economies along with it.
Big trading partners are vital to economic growth and China has already proved to have a taste for what Australia and New Zealand and indeed its region and the broader world offers.
As Chinese demand for Australia’s iron ore drops off, tourism is rising faster than anybody dared expect. The most recent month for which data exists shows yet another record in inbound traveller numbers.
Putting China’s growth into context helps. In 2013 its economic expansion is equivalent to more than six extra New Zealands. Back in 2003, China’s growth was closer to just one extra New Zealand of economic output.
If China’s taste for Australia and New Zealand’s exports were to remain consistent as as a percentage of China’s GDP then as it grows, China would pass on an ever-increasing bounty of free economic growth.
Even if China fell to 3 per cent growth, it would be adding more economic output than it did in 2006.
The chance of a free ride on China’s increasingly capacious coat-tails is perhaps more obvious to policy makers than to pundits inclined to extrapolate recent falls in Chinese headline growth numbers.
The growing importance of China as a source of growth, not just of risk, is evident in the way it features in Central bank thinking and communications.
“They are by now … the largest trading economy in the world. An economy of that size growing at 7 per cent is still quite an impressive performance, if they can do that,” RBA Governor Glenn Stevens told Parliament in February.
China is now the first foreign country mentioned in most official statements from the RBA and other central banks, getting far more attention than even a couple of years ago.