Dragon's Tail: The Lucky Country After the China Boom (Quarterly Essay, Volume 54)
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In "Dragon's Tail," Andrew Charlton explores the supercharged rise of China and considers Australia's future as the Chinese dragon stirs and shifts.
China's rise has been perhaps the most significant economic event in two centuries, occurring 100 times more quickly and on a scale 1000 times larger than Britain's Industrial Revolution. Since 2000, Australia has been an essential part of this transformation, providing the raw materials to feed China's frantic manufacture of steel vertebrae for everything from cars and trucks to railways, apartments and office towers. China's appetite for resources has made us richer than ever before, but it has also drained the competitiveness from many parts of our economy, leaving us vulnerable.
In "Dragon's Tail," Andrew Charlton shows that China's growth model is now reaching its limit, and the world's most populous economy faces a challenging transition. Whether China crashes, or crashes through, this will have dramatic implications for Australia, slowing the demand for our resources and forcing us to reassess the foundations of our wealth. Charlton looks at ways to revitalise the Australian economy and secure our prosperity in a changing world.
"Understanding China's growth model helps explain why australia has done so well in the twenty-first century. But it also explains why, at the same time, our economic anxiety is reaching a zenith: why holden is leaving, why the budget is in such an apparent quagmire, why house prices are soaring, why the dollar is so volatile. China's growth has brought us a windfall, but it is a precarious sort of prosperity." - Andrew Charlton, "Dragon's Tail"
Andrew Charlton is the author of "Ozonomics, Fair Trade for All" (written with Nobel laureate Joseph Stiglitz) and Quarterly Essay 44, "Man-Made World," which won the 2012 John Button Prize. From 2008 to 2010 he was senior economic adviser to Prime Minister Kevin Rudd. He previously worked for the London School of Economics and the United Nations and received his doctorate in economics from Oxford University, where he studied as a Rhodes Scholar.
total income has been falling as more profit is gobbled up by companies, the government and the political elite. But millions of additional people were lifted out of unemployment and subsistence agriculture, so in aggregate Chinese people are better off. Just as with the currency depreciation, low wages growth represents an implicit tax on workers which subsidises their employers. It is another means of boosting the competitiveness of businesses to fuel rapid growth in exports, investments and
the government is forced to accumulate foreign money. And this is precisely what happened in China on a grand scale. As a result of its interventions in currency markets, the People’s Bank of China has amassed a staggering US$3 trillion in foreign exchange. China’s build-up of foreign currency assets has had tectonic implications for the rest of the world. The Chinese government invested this money abroad – for example, it lent $1.3 trillion to the US government, becoming the largest foreign
born to parents impoverished by the great famine, Shi was given up for adoption. Arriving in Australia in 1988, he worked at the University of New South Wales, completing a PhD and finding a job at a small Australian energy research company, Pacific Solar. Fast-forward to 2006 and Shi had moved back to China and was now CEO of Suntech, the world’s largest solar panel–maker and the first Chinese company to be listed on the New York Stock Exchange. Shi was named one of Time magazine’s Heroes of
during the boom and slower to bounce back once it has passed. In Australia economic flexibility is often narrowly defined as industrial relations, but the concept encompasses any policy that helps Australian workers and businesses adjust to changing economic circumstances. Flexibility is enhanced by improved education, lower trade barriers, the elimination of unnecessary regulation, improved worker mobility and greater entrepreneurial agility. Over the past thirty years, both sides of politics
they respond to human traffic across borders. He shows the variety of human motives and responses of asylum seekers and others, ranging from stoicism to exploitation, to greed, to unselfishness and to attempting to live ordinary human lives in extraordinary circumstances. The complexity of this reality challenges simple views. As a strong critic of Australian policy, I found Toohey’s description of the human devastation caused by travelling in overcrowded and unseaworthy boats particularly