How will Australia weather the China slowdown?

Although the détente in the trade war may provide some respite to the Chinese economy in the near term, we remain pessimistic about its longer run prospects. The slowdown in China will undoubtedly have negative spillovers for Australia’s mining sector, especially at a time when industry leaders are already ringing the alarm bells about the potential for the iron-ore-rich Pilbara region to turn into a “wasteland”. But while the drop-off in demand for Australian iron ore could accelerate the demise of Australia’s mining industry, we think the impact on the broader economy will be manageable.