Australia needs to apply a degree of practicality in its relationship with China to ensure its commodities sector remains profitable and competitive, according to former prime minister John Howard.
During his closing speech at the Financial Services Council 2011 Annual Conference, Howard said the relationship between the two countries had been built on a platform of pragmatism whereby Australia understood China wanted reliable supply of commodities and China understood Australia was a reliable supplier.
However, the maintenance of that recognition was key to the relationship continuing strongly into the future, he said.
"We shouldn't kid ourselves that Australia is the only country that has resources that China wants. We shouldn't imagine that China will put up with any breakdown in that reliability of supply that has been a hallmark of Australian exports over the years," he said.
"There are plenty of other countries in the world that have got resources like Australia and they'll cut a lot more environmental and other corners than Australia in selling to China."
In addition, he pointed out while Australia was looking to benefit from China's growth in years to come, it should not think the level of growth would be without interruptions.
In particular, he identified two elements that could impact on China's growth in the short to medium term.
The first of these factors is the aging Chinese population and the effect the one child policy will have on looking after this aging population.
The second is the evolution of the Chinese political landscape, with Howard predicting greater political freedom eventually being demanded from its citizens, which would have flow-on effects for its economic growth.
