The rise of Asia, particularly China, is changing the world and has had a huge impact on the Australian economy, lifting our standard of living to one of the highest in the world. Despite the global financial crisis (GFC) of 2008–09, the debt crisis in the eurozone, and recessions in Europe, Japan and the US, Australia managed to avoid a recession during the GFC. Australia has low inflation, moderate economic growth and an enviable unemployment rate compared with our major trading partners.
The strength of the Australian economy is in large part due to its strong ties with Asia, particularly China—our largest export market. Australia also has strong trading relationships with other Asian countries, including Japan, Korea, Indonesia and India. In 2012 the International Monetary Fund predicted Australia to be the best-performing major advanced economy in the world over the next two years.
According to an Australian Government report, Australia in the Asian Century: White Paper (October 2012):
‘Within only a few years, Asia will not only be the world’s largest producer of goods and services, it will also be the world’s largest consumer of them. It is also the most populous region in the world. It will also be home to the majority of the world’s middle class.
The Asian century is an Australian opportunity. As the global centre of gravity shifts to our region, the tyranny of distance is being replaced by the prospects of proximity. Australia is located in the right place at the right time—in the Asian region in the Asian century.’
Year 11 VCE Economics allows you to grab the “teachable moments” and engage students in current domestic and world events. Unit 2 gives teachers the flexibility to create a topic on a global issue.
Hence, the scope to do an in-depth unit of work on China. Students to examine a vast number of areas related to Australia and China. The following issues try to step out the different stages of the investigation:
The New Medicis http://vimeo.com/70264436
1 Key events in China
Construct a timeline of key events in China’s economic and political history. Use the following BBC timeline to select major turning points in China’s history since 1949:
2 Different perspectives and roles of economic decision-makers in China
Use a series of documentaries to learn about, and then write about, life in China. Write a series of short journal entries in the first person that explain the current views of various economic decision-makers in China (for example, government, businesses, consumers, farmers, women, rural households, families). (Approximately 300 words for each view)
Write a journal entry in the first person that describes the views of four of the following people:
- a member of the Communist Party of China (CPC)
- the President of the People’s Republic of China
- a rural or urban person living in poverty
- a Chinese business investor
- a Chinese worker or manager
- a Chinese businessperson
- a wealthy Chinese person
- a young women planning to start a family
- a rural person who has moved to the city for work
- a young person wanting to get an education and work.
- ‘The Ka-Ching! Dynasty’, Foreign Correspondent, ABC, 7 February 2012: http://www.abc.net.au/foreign/content/2012/s3425244.htm (summary, transcript and video)
- China: Triumph and Turmoil, SBS, 2012, three-part documentary series (shown on 1, 8 and 15 August 2012). It is available on YouTube in four parts:
- ‘Dirty Secrets’, Foreign Correspondent, ABC, 26 October 2010: http://www.abc.net.au/foreign/content/2010/s3048959.htm (summary, transcript and video)
- ‘Beyond the Lost Horizon’, Foreign Correspondent, ABC, 27 September 2011: http://www.abc.net.au/foreign/content/2011/s3327036.htm (summary, transcript and video)
- ‘The Big Smoke’, Foreign Correspondent, ABC, 24 March 2009: http://www.abc.net.au/foreign/content/2009/s2526001.htm (summary, transcript and video)
- ‘The Biggest Domino’, Foreign Correspondent, ABC, 18 May 2012: http://www.abc.net.au/foreign/content/2010/s2903061.htm (summary, transcript and video)
3 General country comparison between Australia and China
The Human Development Index (HDI) is a comparative measure of life expectancy, literacy, education, standards of living, and quality of life for countries worldwide. It measures wellbeing, especially child welfare. In 2012, Australia ranked number 2 in the world on the HDI, while China ranked number 101.
With reference to the HDI for 2012 and International Human Development Indicators (see references below), compare, contrast and then explain the substantial differences between the HDI ranks of the two countries. (Create a table for data comparison and write 300 words to complete this question.)
4 The recent performance of the Chinese economy and the Australian economy
Compare and contrast the general economic performance of Australia with that of China.
Select and interpret five tables and five graphs using the websites below. (500 words)
(click on Please select a country to view in the drop-down box to the right of the home page and select Australia, then Economy: Australia—repeat for China)
5 Importance of China to the Australian economy, the Asian region and the world economy
China has been, and at present remains, the manufacturing powerhouse of the world. It has become the world’s largest trading nation, is one of the world’s biggest lenders, and has the world’s largest population. China’s economic growth and development over the past two decades has been enormous. From 1979 to 2010, its average annual GDP growth was nearly 10 per cent.
Explain four reasons why China is so important for Australia economically, the Asian region and the global economy. (150 words each)
6 An explanation of aggregate demand-side factors and aggregate supply-side factors influencing China
Select two aggregate demand-side (AD) factors and two aggregate supply-side (AS) factors influencing China’s economic growth. Research and then explain the theoretical link that your selected factors could have on the current and/or future rate of economic growth in China. Select two from each column. You may choose other relevant AD/AS factors to explain. Discuss any other choices with your teacher. (Approximately 200 words for each factor)
|Aggregate demand-side factors||Aggregate supply-side factors|
|Consumer confidence||Push for greater efficiency/productivity|
|Government spending on infrastructure||China’s push to liberalise its exchange rate|
|China’s push to liberalise its exchange rate||China’s push to liberalise its interest rates|
|China’s push to liberalise its interest rates||Labour force participation rate|
|Level of disposable income||Foreign investment rules affecting China|
|Credit growth||Geopolitical events (e.g. climatic, political, economic)|
|Economic growth of China’s major trading partners||Tariff rates|
|China’s population growth||Labour costs|
7 Negotiating an Australia–China Free Trade Agreement (ACFTA)
Write an article for The Economist magazine on the importance of an Australia–China Free Trade Agreement (FTA) and the recent challenges involved in the FTA negotiations. (Approximately 600 words)
Your answer should cover:
- the difficulties associated with negotiating an FTA
- China’s concerns about trade and investment in Australia
- Australia’s concerns about trade and investment in China
- Australia–China economic links and policies.
8. Australia–China trade relations
a. A currency pact
The Australian dollar is now the third currency in the world (after the US and Japan) that can be converted directly into the Chinese renminbi (yuan). This represents a major new agreement between China and Australia. This is a huge advantage for Australian and Chinese businesses as it means they will not have to first convert currency into US dollars and then into renminbi or Australian dollars. With China’s currency increasingly important in the Asian century, this agreement further promotes business with China, our number one trading partner.
Explain the benefits for Australian businesses of being able to trade Australian and Chinese currencies directly. (150 words)
b. Annual formal trade negotiations
In April 2013, the then Prime Minister, Julia Gillard, successfully negotiated to hold annual formal talks between Australia and China’s senior leadership teams. This represents a new partnership agreement between our two countries, focused not just on economics, but also on peace and stability.
Explain two reasons why this new formal partnership received such broad praise from all groups and parties within Australia. (150 words)
9. Policy action taken by the Chinese government
- May 2013 saw the appointment of China’s new leadership team, including President Xi Jinping and Prime Minister Li Keqiang, as well as key changes to some of the top bureaucratic positions of leadership. The general view is that major pro-market reforms will be made in China with the decentralisation of government planning.Discuss the likely impact of reducing government control in favour of market forces on each the following (150 words each):
- private businesses in China
- income distribution in China
- economic growth in China
- private consumption in China
- inflation in China.
- Austrade: http://www.austrade.gov.auAusAid Global Education: http://www.globaleducation.edu.au and http://ausaid.gov.au/globaled/Pages/default.aspxDepartment of Foreign Affairs and Trade : http://www.dfat.gov.auThe World Bank: http://www.worldbank.org
World Trade Organization: http://www.wto.org
Australian Bureau of Statistics: http://www.abs.gov.au
International Monetary Fund: http://www.imf.org
OECD (Organisation for Economic Co-operation and Development): http://www.oecd.org
Asian Development Bank: http://www.adb.org
China Online: http://www.chinaonline.com
CIA (World FactBook): https://www.cia.gov/library/publications/the-world-factbook/index.html
United Nations: http://www.un.org/en
Asia–Pacific Economic Cooperation: http://www.apecsec.org
The Australian Financial Review: http://www.afr.com.au
Business Review Weekly: http://www.brw.com.au
Prof Ian Lang, The New Medicis. http://vimeo.com/70264436