MNI BRIEF: RBA Sees China Meeting GDP Target, Support Iron Ore

China is likely to meet its 5% GDP growth target this year and has successfully found alternative markets for its goods, mitigating the impact of U.S. trade restrictions, supporting iron ore prices and insulating the Australian economy, Michele Bullock, Governor of the Reserve Bank of Australia, said on Wednesday.

“So the reason that's important is that we export a lot of iron ore and coal, obviously, to China and the steel industry there is very important,” she told a senate committee hearing. “But what we'd observe is that the iron ore price really hasn't done much, so we're not seeing signs yet that's impacting us, but that's the risk that if the trade impact in China quite heavily, then that will impact steel manufacture in China and also, therefore, ultimately us.”

However, Bullock warned that weakness in China’s real estate sector will continue to weigh on the broader economy.

China is struggling with a supply glut and authorities have declined to bail out developers, forcing them to look after this own business. 

"So [Beijing] is leaning in however they can, on monetary policy and fiscal policy, but in terms of real estate market, I think that's just going to remain dominant for some time," she said, noting the Chinese economy is "more or less stable." 

She added that while China is finding new export markets, risks remain that trading partners could respond with new restrictions.