Japan's heady growth powered a boom in the 1980s, but trade with China, which dethroned Japan as Australia's top trading partner in 2009, appears headed even higher.
The 7.7 percent of GDP it reached in 2011 eclipsed Japan's average of 6.4 percent in the 1980s and even its peak of 7.4 percent in 1985. One quarter of Australian exports are now shipped to China.
Mark Beeson, a political scientist at the University of Western Australia, injects a note of caution: Resource booms are often followed by busts.
Commodity prices have already come off highs as global mine production catches up with Chinese demand and the global economy has slowed. Some companies have shelved mine expansion plans.But the outlook for investment remains strong, the Australian government says, with about AU$500 billion in projects still in the pipeline. "There're lots of things that could go wrong, of course, but if it carries on, it's going to get more and more important," Beeson says. In some ways, it already is: Turf wars between farmers and miners have triggered a national debate over agricultural land use, a rarity for such a sparsely populated country. In October the government announced plans to create a national register of foreign-owned farmland amid concern that such record-keeping has been piecemeal in the past. Not since the 1950s, before the modern, free-trade era, has a country done more trade with Australia as a percent of GDP. Then, Australian trade policy gave Great Britain preferential treatment and put the needs of the British Empire ahead of national interests. At the peak of a Korean War wool boom, trade with Britain reached as high as 19.5 percent of GDP, according to Australian government statistics. Though Great Britain and the United States remain far more pervasive influences, China is becoming part of the political and social fabric in Australia, says Chen Jie, a lecturer on international relations at the University of Western Australia. He notes that lawmakers now visit China at the invitation of business interests there, influencing Australian politics.