China congress, leadership shake-up to have implications for Australia

Preparations are underway for the 19th National Congress of the Communist Party of China to be held in Beijing on 18 October 2017. Source: AAP

The outcomes of China's party congress next week will have implications for Australia and the economy.

Chinese President Xi Jinping is set to shake up his government's inner circle and spell out his country's agenda for the next five years.

China's Communist Party next week is having its five-yearly congress from Wednesday, which will include a leadership reshuffle.

Mr Xi is expected to retain his position and install key allies into the politburo standing committee (cabinet of seven) and 25-member wider ministry.

His second term is expected to wrap up in 2020 and there's wild speculation over whether he will name a successor or perhaps push for an unconventional third term.

The outcomes of the congress will have implications for Australia, which is dependent on a strong economic relationship with China.

Treasurer Scott Morrison, in a speech to a business function in New York on Thursday, US time, urged caution about China being a key source of growth for Australia.

"The risks to the upside that have borne so much fruit for the Australian economy, can be just as sharp on the downside," he said.

Given the risk to the economy of a slowing China, the government had sought to expand and diversify other trade relationships.

Mr Morrison reflected on the challenges facing China as it undertook necessary structural reform, weaned itself off investment-led growth and boosted private consumption while reining in debt.

A high level of credit has intensified the risk in China's financial system, especially among lower-tier banks and in the "shadow banking" sector.

The treasurer also pointed out creating 13-15 million jobs a year to prevent unemployment rising was no easy task.

"China generates more jobs in just over week than we do in a year," Mr Morrison said.

China's foreign policy platform will also hold strategic implications for Australia and the Asia Pacific region.

Specific examples include freedom of navigation amid the South China Sea maritime boundary dispute as well as China's actions on curbing the North Korean nuclear threat.

Mr Xi's signature One Belt One Road infrastructure bonanza is expected to be heavily spruiked at the congress.

While Australia has not officially signed up to the scheme, Australian businesses could be in the running for contracts in third-party countries.

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