Chalmers likes China’s economic stimulus plans but lobster still not on the menu

Beijing: Treasurer Jim Chalmers says Australia can only benefit from China’s plans to pump billions of dollars into its sagging economy, but the country’s protracted ban on importing lobster continues to undercut the Canberra-Beijing trade relationship.

Speaking in the Chinese capital on Friday after meetings with local officials, Chalmers said Australia had “a lot at stake” when it came to China’s economic slowdown and he welcomed signals that more stimulus measures were in train to reboot growth.

Treasurer Jim Chalmers flew into Beijing amid a flurry of economic activity by authorities this week.Credit: Lisa Visentin

But with few concrete details available, including how much money China may be prepared to shell out on any fiscal stimulus package to stabilise its property sector, Chalmers said it remained to be seen what impact the government’s intervention would have.

“I wanted to make it really clear, we welcome efforts to boost growth in the Chinese economy,” said Chalmers, the first Australian treasurer to visit China in seven years.

“What happens here and what is decided here has big consequences for our own economy, our own workers and businesses and investors, and for our country more broadly. We do have a lot at stake, and we do have a lot to gain when it comes to the engagement and the stabilisation of the relationship with China as well.”

Chalmers flew into Beijing amid a flurry of economic activity by authorities this week, signalling increasing alarm among the country’s leadership about the free-falling property sector, flatlining consumer confidence and the widespread expectation that China will fall short of its 5 per cent annual growth target.

The China live export ban is crippling the Australian rock lobster industry. There are fears some fishers will not survive the winter months.Credit: AP

Australia’s Treasury is forecasting that China’s growth will remain below 5 per cent for three years, marking the weakest expansion streak since it began opening up in the late 1970s.

Chalmers warned this would have major consequences for Australia’s economy, with a 1 percentage point drop in China’s GDP growth roughly costing Australia about $6 billion in lost output.

Australia’s commodities industries have borne the brunt of the Asian giant’s slowdown, with its property market collapse depressing demand for Australian steel to build new homes and triggering a slump in the iron ore price. Treasury has warned that a further slump in the price of iron ore and metallurgical coal could wipe up to $4.5 billion from federal coffers.

Chalmers said the Chinese government’s plans to boost growth formed part of the discussion at the Australia-China Strategic Economic Dialogue on Thursday evening.

Chalmers co-chaired the dialogue with Zheng Shanjie, who leads China’s National Development and Reform Commission, a top economic planning body. The meeting marked the resumption of the talks for the first time since 2017. The pair committed to holding an annual dialogue, with Australia to host next year’s discussions.

Chalmers said he also raised the long-standing trade ban on Australian lobsters and repeated the government’s view that they were seeking “a speedy resolution” to the issue.

The lobster ban is the last major remaining hurdle after Beijing agreed to lift almost $20 billion of economic sanctions imposed on a dozen Australian industries when relations between the countries plummeted under the former Coalition government.

Chalmers said there were still a “couple of technical issues” being worked on between Australia and China’s agriculture and trade departments, but added: “Hopefully, we will see wonderful Australian lobster gracing the tables of Chinese homes and restaurants as soon as possible”.

The meeting coincided with an announcement by the Politburo, China’s highest decision-making body, chaired by President Xi Jinping, that it would take steps to ensure the real estate market would “stop declining”, raising expectations of further stimulus measures, which have so far been piecemeal.

The Politburo did not provide any detail on the potential scale of fiscal spending, but citing two people familiar with the matter, Reuters reported that the Ministry of Finance was planning to issue 2 trillion yuan ($284.43 billion) of special sovereign bonds this year. That funding would be evenly split between stimulating consumption and helping local governments tackle debt problems, it said.

It followed surprise measures unveiled by China’s central bank earlier in the week, which included lowering borrowing costs, allowing banks to increase their lending, and slashing interest rates on existing mortgages. It was its most aggressive stimulus package since the pandemic.

Get a note directly from our foreign correspondents on what’s making headlines around the world. Sign up for the weekly What in the World newsletter here.