Reflecting on a visit to China in April, RBA deputy governor Andrew Hauser says he encountered positivity from Australian companies despite Donald Trump having a week earlier announced he would impose tariffs of 145 per cent on the Asian giant.
In Shanghai, he attended a discussion across retail, agriculture, banking, finance, law, health care, manufacturing and commercial property sectors.
"What really struck me about that session was how upbeat most, if not all, of the firms were about the outlook for their businesses," Mr Hauser told the Lowy Institute in Sydney on Thursday night.
"For anyone wanting to cut to the chase … I'll put it more bluntly: don't count China out."
The central bank delegation heard similar sentiments in separate discussions with companies active in steel and iron ore.
"They saw few threats to the scale and cost advantages of Australian ore, relative to other producers in the near term," he said.
"Their central expectation was for Chinese steel output to remain relatively robust, remaining at or near one billion tonnes a year in the near term."
Further Chinese policy stimulus was expected to continue to involve steel-intensive infrastructure investment, despite the pivot to consumption, he said.
China is by far Australia's biggest iron ore market and yields about $32 billion in export revenue every three months, according to the Department of Industry.
There was also a sense among Australian companies that recent developments in trade policy could enhance their competitive position in Chinese markets, Mr Hauser said.
The US tariffs on China were reduced to 30 per cent on May 12, but in forecasts released this week, RBA governor Michele Bullock noted the volatility meant there was an outside chance Australia could tip into a recession if the bank's worst fears came to fruition.
The RBA this week cut the cash rate by a quarter point to 3.85 per cent, easing pressure on mortgage holders grappling with living costs and interest repayments.
Three other themes emerged from Mr Hauser's visit, in which he joined an RBA team based at the Australian embassy in Beijing responsible for "taking the temperature" of the Chinese economy.
People felt the economy was finally turning a corner in early 2025, the scale, speed and scope of Mr Trump's tariff announcements were a shock, and China felt it had a strong economic hand in responding to tariffs, he said.
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