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The Australian economy has come to rely on China economically, as a large portion of Australian minerals are shipped to China. News that China’s Communist party is going to relax some of its policies, possibly boosting economic output, is therefore very relevant to the Antipodean currency.
According to reports, Beijing will loosen some of the control it has over the economy, allowing foreign banks to set up shop in China, and the country’s one child policy will be relaxed, which could lead to an increase in population that would boost consumer demand. However, the party has so far remained vague over the exact details.
The Chinese manufacturing sector has made a recovery over the past few months. If the new reforms announced by Beijing do manage to increase economic output, we could see increased demand for the Australian dollar against the US dollar.