Year of the Snake augurs well for Sino-Aussie economic ties

Perhaps more than any other global economy, Australia, a mineral-rich country, is keeping an eagle's eye on developments in China and the its expected economic rebound in the Year of the Snake.

As urbanization continues to drive its infrastructure investment, China consumes about half of the world's production of iron ore, coking coal and thermal coal, resources that Australia can supply in abundance.

The phenomenal growth in China has seen the price of Australia' s commodity exports rise to unprecedented levels until last year when the price of iron ore plummeted.

Despite this hiccup, Australia's terms of trade the price of exports relative to the price of imports started rising rapidly from the mid 2000s to a new peak in late 2011.

According to Doug Ferguson, KPMG's Partner in Charge, China Business Practice-Asia Business Group, that storm has passed.

"We believe that China's economy that has bottomed out in the third quarter has now stabilized and is showing a positive trend and on target to achieve an 8 percent GDP growth in 2013," Ferguson said.

According to Ferguson, China's macroeconomic fundamentals are encouraging, with urbanization rate at 52 percent, net trade figures steadily improving, PMI index improvement and inflation appearing under control.

Ferguson, a veteran China watcher and a key player in the forging of Chinese and Australian business partnerships, told Xinhua that China's structural shift towards domestic consumption is underwriting the country's long-term repositioning in the global economy.

"The prospects for further growth in China's service sector and growth of the private sector are most exciting," Ferguson said.

Ferguson added that with China's accumulated foreign reserves and central policy implementation, "we are provided with a strong safeguard against major economic risks."

Ferguson also cited tourism in Australia as a core beneficiary of Chinese growth.

"The Australian tourism market is now benefitting hugely from the 700,000 Chinese tourists who have visited our country and we are seeing healthy increases in Chinese students and migrants coming to Australia," Ferguson said.

Certainly the stars appear to be aligning early on in the Year of the Snake assuring China's stellar role in the world economy.

According to Annette Beacher, head of Asia-Pacific Research at TD Securities, the Chinese government's realignment to domestic consumption and continued commitment to urbanization are reasons enough for China's sustained economic growth.

"Not only did 2012 close on a strong note, January business surveys hinted at a similar 7.75 percent GDP growth in early 2013," Beacher said.