China may emerge as a world’s advocate for free trade should President Trump succeed in putting up trade barriers in the United States, which could soften any negative consequences for WA business, says Chamber of Commerce and Industry of Western Australia (CCI) Chief Economist Rick Newnham.
Mr Newnham told a packed CCI business breakfast this morning that if President Trump’s policies of economic protectionism are implemented, China would likely step up as the world’s leading advocate of globalisation – which could be a win for WA’s resources industry and other export-driven sectors.
“As Western Australia’s largest trading partner, the strength of the Chinese economy is absolutely critical to the health of our own,” Mr Newnham said.
“If China’s economy strengthens off the back of greater prominence on the world stage and in Asia, subsequent growth in their economy could increase demand for Western Australian exports – namely iron ore – which is good news for the WA economy, which is overwhelmingly export-driven and dominated by global iron ore demand. If China is successful in implementing its one-belt one-road policy it will drive infrastructure investment in our region.
“If President Trump follows through on his $1 trillion infrastructure commitments and the iron ore price remains high, this may contribute to another wave of iron ore investment in WA, which is great news for both business and for job creation. There are signs that markets have reacted warmly to the Trump presidency so far, so WA economists like myself will be watching with great interest to see how events unfold.”
Mr Newnham did however caution that there were significant risks associated with the controversial President’s reign.
“Western Australia’s prosperity is underpinned by stability in the Asia-Pacific region,” Mr Newnham said.
“Any military conflict in the South China Sea will impact on WA hard. A huge amount of WA’s exports – including iron ore – make their way to China through this critical trade route, so any destabilisation of this zone will have a serious impact on WA’s economic health, as this would deter business investment which would in turn stifle growth and threaten job creation.
“The most important thing for Western Australia to do amid such a tumultuous global climate is stay true to our free trade principals – as an export-driven economy that relies on exports for prosperity, the WA we know today has been built on free trade, and free trade will always remain the key to strengthening our economy for future generations.”
Media contact: Kate Hodges – 0448 928 227