Early advantage paying dividends

China is Australia's No 1 trade partner, export destination, import source and, increasingly, investment source. It's no wonder a long line of Australian state and federal ministers will visit Beijing to celebrate the 40th anniversary of diplomatic ties between Australia and China.

Foreign visitors are mainly concerned with the fast pace of economic growth in China and its impact on the rest of the world. Now the fear is not of how fast China is growing, but how fast it is slowing. Because, with the euro crisis and the on-again off- again recovery in the United States and Japan, if there's anything the world fears more than a fast China, it is a slow China. This fear of a Chinese slowdown has come to the fore especially after the People's Bank of China introduced another round of interest rate cuts and recent data have not been as strong as expected.

It is debatable whether interest rate cuts would work anyway, given the amount of stimulus that is still in the Chinese economy as Beijing moves economic activity to the second and third-tier cities in the interior. It is not like the United States where rates are so low that expansionary monetary policy is now like "pushing on a string".