hillary Clinton believes Australia is too economically dependent on China, warning that dependence could 'undermine your freedom of movement and your sovereignty — economic and political'. Citing the example of European dependence on Russian gas, Clinton urges Australia to diversify its economic relationships. Is she right?
Economic dependence can be a problem in two ways. The first is 'sensitivity dependence', where one economy's health is tied to another's due to the depth of economic links between them. That is, 'China sneezes, Australia catches a cold'. A slowdown in China's economy causes a contraction in the construction and manufacturing industries, in turn reducing their imports of raw materials, depressing global prices and hurting our mining industry, especially higher-cost producers.
illary Clinton believes Australia is too economically dependent on China, warning that dependence could 'undermine your freedom of movement and your sovereignty — economic and political'. Citing the example of European dependence on Russian gas, Clinton urges Australia to diversify its economic relationships. Is she right?Economic dependence can be a problem in two ways. The first is 'sensitivity dependence', where one economy's health is tied to another's due to the depth of economic links between them. That is, 'China sneezes, Australia catches a cold'. A slowdown in China's economy causes a contraction in the construction and manufacturing industries, in turn reducing their imports of raw materials, depressing global prices and hurting our mining industry, especially higher-cost producers.
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