Day 17 Challenges to Australasian Economic

Challenges to Australasian Economic

Recently, the Australian dollar exchange rate experienced a drastic downturn, which drops about 13 percent since September. The major reason of this is that the global bulk commodity’s price has been volatile during last six months. Australian economic prosperity was relied on the mining and agriculture. However, the intentional iron ore’s price has been decreased by forty percent, the copper’s price declined by nine percent, and aluminum also had a price drop in September. That was a disaster for Australian economy because mining is around twenty percent of Australasian GDP( agriculture sector is a twelve percent, by the way). Economists said Australia is facing the challenge for adapting the international bulk commodity’s price variation and looking for substitution resources.But there is another challenge everyone utterly choose to ignore, the international competition.

Besides the exportation of mining and agriculture products to the east-Asia region, there are sixty-four percent of our GDP consist of the service factor. In these years, the federal government did an excellent job to protect our local business by law. Nevertheless, the tendency of integrate global economics will comply every country to face competition sooner or later. Our economies are literally on the verge of contending against other competitors around the world. The biggest challenger of our local companies will from China and India. These are fast developed economy entities with relatively low wage rates, thus they will be able to carry out projects with lower cost. In other words, more competitive. In order to provide a vivid portrait of our situation, let me illustrate some examples: The Melbourne West-East link tunnel project has been postponed due to the financing problem. The estimated cost for that eighteen kilometer free way is seventeen billion AUD. What will be the average cost for Chinese constructors to build one kilometers of the freeway? The answer is between thirty million and one hundred million CNY. To ensure the quality of work plus other infrastructures, the cost should be 20 billion CNY for the East-West link project. That is twenty percent(according to the exchange rate) of our cost anticipation. In addition, let us concentrate on commute system a bit longer. The train service in Melbourne has always been a problem, because its ultra-slow transportation speed. And that was after a large upgrade by a HongKong train service company. Chinese has the worlds the most leading high-speed railway system, and the CSR Corporation Limited and CNR Corporation Limited are forming an integrated company. These are the largest railway construction companies in the world, and their aim is to export the advanced railway system around the world. Furthermore, telecommunication company such as Telstra faces little competition within the country. So their service quality is really poor. If any challenger, like BSNL from India or China Telecom are allowed to enter the market, it will be a huge compact on our market. Because they have lower labor/production cost, better service and sufficient asset to expand the market.

In conclusion, Australian can not shut the boarders to refuse competition forever. We need to be prepared and enhance our goods /service quality in this economic war. Otherwise, we will not stand a chance to win.