Andrew Hauser: Open the door and see the mountain - reflections from a recent trip to China

Speech by Mr Andrew Hauser, Deputy Governor of the Reserve Bank of Australia, to the Lowy Institute, Sydney, 22 May 2025.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Introduction

Of all the trends shaping the Australian economy over the past half century, one of the most profound has been the long swing towards Asia (Graph 1) and, more specifically in recent years, China – now our biggest single trading partner by a country mile (Table 1). But China is also front and centre in the US administration's rapidly evolving tariff strategy. How that strategy plays out, and how China responds, are therefore key issues for the economic outlook in Australia, and hence the RBA's monetary policy.

Given the importance of understanding the Chinese economy, the RBA has maintained a small team based at the Australian Embassy in Beijing since 2011, to take the temperature of the economy up close. Their work, together with the work of our Australian-based staff, directly informs our Monetary Policy Board's deliberations – most recently earlier this week – and our broader analysis.

I recently joined the team to speak with a wide range of organisations drawn from right across the Chinese economy and the Australian export community, in both Beijing and Shanghai. The trip, arranged months earlier, turned out to be auspiciously timed, because it came in the week after so-called 'Liberation Day' – when US tariffs on China rose to 145 per cent, and China retaliated in kind.

Tonight, I want to discuss four key themes that we heard that week, and which – despite the further dramatic turn of events since then – seem so far to have stood the test of time.