Australia could power China into becoming world's second biggest economy

Jan 14, 2005 01:00 AM

Australia could power China into becoming the world's second biggest economy within 15 years, a special report by the American National Intelligence Council has found.
The council, which has looked at how the world will change by 2020, said Australian natural gas deposits would be needed by China as its economy rivalled that of the US. But it warns Australia's low fertility rate, along with other western nations, will require an increase in immigration to stave off long-term economic problems.

The council is the medium and long term strategic research arm of the CIA and bases its work on extensive interviews with government and non-government personnel. It predicts China's economy will rank only behind the US by 2020, with the Indian economy likely to be larger than most European economies.
It said one of the biggest issues likely to arise is the need for the economies of China and India to feed sharp development with energy supplies. The rise of natural gas would be beneficial to both those wanting the resource, and those supplying it. That left Australia in a very strong position with China.

"Europe will have access to supplies in Russia and North Africa while China will be able to draw from eastern Russia, Indonesia and potentially huge deposits in Australia," it said.
"The United States will look almost exclusively to Canada and other western hemisphere suppliers."
The report warns Australia, along with a series of other developed countries including New Zealand, will face population problems because of declining fertility rates. It said migration had the potential to solve such fertility problems which could threaten the economic future of some countries.

The council believes economic growth in Indonesia could average 6 to 7 %, with the population tipped to climb to more than 250 mm. But without that growth, stability in Indonesia could be threatened, posing problems for the entire region.
"With slower growth, its economy would be unable to absorb the unemployed or under-employed labour force, thus heightening the risk of greater political instability," it found. "Although an Indonesian national identity has been forged in the five decades since independence, the government is still beset by stubborn secessionist movements."

The centre raises concerns that although Asia is likely to drive the globe, there will be a sharp division between northern nations and the south. It said Islamic fundamentalism is likely to make large inroads into Indonesia, Malaysia and parts of the Philippines -- all major trade partners of Australia.
The strength of China and India may mean countries in South-East Asia will push for a single economic and investment community.

Source: The Australian
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