China slowing down, not shutting down

Just 24 hours after the federal government nailed Australia's future well-being to
the commodities boom mark two, the main provider to the nation's breadbasket - China
- reported a marked slowdown in economic growth.
But before Treasury officials reach out for their spreadsheets to recalculate the
economic outlook yet again, market economists believe the Asian giant has done no
more than shift to a more sustainable level.
The Chinese economy grew at 10.3 per cent in the three months to June, slowing from
the blistering 11.9 per cent growth in the March quarter and the 10.7 per cent in
the final quarter of 2009.
This follows earlier decisions by Chinese authorities to introduce a range of
measures to prevent the economy from overheating.
"The economy is still recording solid growth, but the pace of growth is slowing to a
more sustainable rate, while inflation is also easing," Commonwealth Securities
chief economist Craig James said.
"The latest data clearly shows that policymakers are on the right track ... (it's) a
slowdown, not a shutdown."
Treasurer Wayne Swan was out selling his economic update on Thursday, defending the
numbering that will see the budget back in surplus by $3.1 billion in three years
time.
"There's no better evidence of responsible economic management than the updated
numbers I released yesterday," Mr Swan said in an address to the Whitlam Institute
and University of Western Sydney on Thursday.
The opposition has described the new Treasury forecasts as "dodgy", criticism that
Mr Swan called "appalling".
"The fact is the Treasury has supplied its forecasts to us in the same way it
forecast to the previous government," Mr Swan told ABC Radio earlier.
Laying out the economic forecasts now, and explaining how a massive $6 billion
upgrade to commodity price forecasts will reap $10.5 billion through the
government's proposed mining tax, was seen as one of the final acts before Prime
Minister Julia Gillard calls an election.
While the coffers are rolling back into the revenue chest, Ms Gillard warned that
this won't be a spendthrift election campaign, and the government would maintain the
discipline that will see the budget back in the black.
"Those expecting an old-style spend-up campaign can forget it," the prime minister
told the National Press Club in Canberra.
"Any commitments made in the upcoming campaign will not add a single cent, not a
cent, to the budget bottom line."
The Business Council of Australia (BCA) - that represents Australia's top 100 CEOs -
welcomed the focus on the economy in Ms Gillard's first address to the Press Club as
prime minister.
"In identifying an economic agenda founded on productivity, growth and
participation, Ms Gillard has identified the ingredients for making the economy
stronger for the benefit of all Australians," BCA President Graham Bradley said in a
statement.
He said this approach was well aligned with the policy benchmarks recently outlined
by the BCA for the election.
Presenting an equally austere message for the campaign, Opposition Leader Tony
Abbott said he doesn't believe political parties should "bribe their way into
office".
"I think that what political parties owe the public is prudent, careful, responsible
government that respects the tax payer dollar," Mr Abbott told reporters in Lismore.
But he said the government's debt needed to paid back.
"As long as that debt is there, it means higher taxes, it means higher interest
rates, it means less prosperity".