China’s economy and Australian iron ore exports will be fine amid US trade war, RBA deputy says

China’s economy will be fine and Australia’s iron exports will remain in good strength for the foreseeable future, says Reserve Bank deputy governor Andrew Hauser.

RBA deputy governor Andrew Hauser. Picture: NewsWire / Martin Ollman

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China’s economy will be fine and Australia’s iron exports will remain in good strength for the foreseeable future, says Reserve Bank deputy governor Andrew Hauser following a recent trip.

In a highly optimistic assessment of the Chinese economy given to the Lowy Institute in Sydney on Thursday night, Mr Hauser said there was a “deep belief” the Chinese Communist Party was committed to delivering a growth target of “around 5 per cent” a year despite trade tensions with the US and that Australian firms active in China were upbeat.

“The commitment to the goal had a seemingly totemic status among most of those we spoke with,” he said, adding there was a “confidence that the Chinese authorities had the policy tools, the space and the will to inject the domestic stimulus needed to compensate for any weaker growth in trade”.

The US and China agreed this month to slash their reciprocal tariffs to 30 per cent and 10 per cent, respectively.

Mr Hauser said there were constraints on China’s ability to deploy stimulus.

US President Donald Trump. Picture: AP

“How much headroom is left for further stimulus?” he said.

“Public debt is elevated, particularly at local government level; nominal interest rates are already quite low, and focused on exchange rate and financial stability as well as demand management; and the central bank has made it clear it does not favour quantitative easing.”

Mr Hauser said there was a general expectation that a large share of the economic costs of US tariffs would fall on America itself, and that there was a determination not to cushion that impact.

There were real doubts about how much manufacturing would relocate from China to the US.

But the surprise for Mr Hauser was the optimism around Australian firms on the trip with him.

“The recovery in sentiment in early 2025, and confidence that the authorities would ‘do what it takes’ to sustain the economy was part of it,” he said. “But there was also a sense that recent developments in trade policy could enhance (Australian firms’) compet-itive position in Chinese markets.”