Australia's future prosperity hinges more on its response to changes in international order, including U.S.-China relations, than on domestic reforms, according to a report from the Lowy Institute.
In a report released on October 12, the Lowy Institute, a leading policy think tank in Australia, raised concerns about whether the steady improvement in global economic output and living standards over the past 75 years can continue in light of three significant changes.
The report, authored by economic expert John Edwards, who has served on the board of the Reserve Bank of Australia and as chief economist for HSBC Australia and New Zealand, outlines these changes.
The first change is the intensifying U.S.-China competition driven by China's growing economic stature. The second is the shift in the global economic order that has supported active economic exchanges between major powers and smaller nations. The third is the impact of new technologies, including artificial intelligence (AI), on the production of goods and services.
Edwards noted that while Australia is economically closely tied to China, it maintains cultural and security ties with the U.S. He warned that if factors disrupting the international economy unfold unfavorably, Australia could face significant risks. He explained that since the 2000s, the contradiction between Australia's defense and security needs and its trade interests has been increasingly difficult to reconcile.
The most unfavorable scenario for Australia would be a hostile deterioration in U.S.-China relations, leading to a breakdown in trade and investment between the two countries. Allies and economically dependent nations could be pressured to choose sides, reminiscent of the Cold War, with restrictions on technological advancement and dissemination.
Conversely, a favorable scenario would involve the U.S. and China agreeing on international rules that support cross-border trade and investment, with AI driving economic growth and productivity, creating more and higher-quality jobs than those that may be lost.
* This article has been translated by AI.
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