the signs it needed to do so were quite evident : increasing general price inflation, escalating property prices, doubts about the process of credit growth and credit risk management, and so on. but just how big a slowing was occurring? for much of this year, that was the question that people have been trying to answer. my assessment is that the slowdown has been more material than had been expected a year ago, but not disastrously so. there are some signs that the moderation may have run its course, though further data are needed before such a view could be offered with confidence. so the chinese economy has not crashed. but neither is it likely to return to the sorts of double - digit percentage rates of growth in real gdp, and 15 per cent growth rates for industrial production, that we saw for some years. people expecting that to resume are likely to experience disappointment. these trends are entirely consistent with two propositions that we have advanced over the past several years. the first was that china ’ s economy would have an important and bis central bankers ’ speeches increasing weight in the regional and global economies. china ’ s economy is nearly three times the size it was a decade ago. one corollary of this is that even “ moderate ” growth in china is quantitatively significant. if china grew by, say, “ only ” 7 per cent in 2013, that would add more to global gdp than the 10 per cent growth recorded in 2003. 3 the second proposition was that china, like all economies, has a business cycle. it is affected by what happens elsewhere in the world, and by its own internal dynamics, including the decisions of its policymakers. swings in china ’ s economic performance are increasingly affecting australia ’ s economy and that of the region – and the world. hence the focus on monthly data reports from china these days in our business press, in addition to the focus on the chinese political situation. the chinese “ purchasing managers index ” is now as keenly awaited, and is as potentially market moving, as the original us pmi measure, known these days as “ ism ”. 4 there is some tentative evidence that chinese data “ surprises ” have become increasingly influential in driving movements in australian financial prices such as the exchange rate and share prices. turning then to australia, two years ago i noted that we could not know how much of the rise in the terms of trade would be permanent, and that there was therefore a case to save a good proportion of the additional

respect, the legislation recently approved by the council of ministers initiating transposition should smooth access to services activities ; prior authorisation will no longer be needed, administrative procedures will be notably simplified and certain obstacles to free movement of services will be eliminated. nonetheless, the success of the reform, in terms of greater liberalisation of services, will depend on its proper application to key sectors, such as professional services and retail trade, and on the strict limitation of legally permitted opt - outs. top of the to - do list is a matter concerning the main source of wealth of any country : the human capital of its citizens. it is well known that the level of educational attainment of the spanish labour force increased notably during the second half of the past century. but it is also a fact that convergence in educational terms with our european partners has slowed in recent years, which will bear most adversely on the economy ’ s productivity. many facets of our education system need changing, but the overriding priority is to extend and improve the quality of secondary education, an area where regional governments admittedly have an essential role to play. the system for continuous training throughout employees ’ working lives must also work properly. here, the delay in the labour market reform not only has adverse effects on employment but also discourages investment in human capital by workers themselves and by companies, which negatively impacts productivity. evidently, the situation we are in calls for a whole set of thoroughgoing reforms and measures, in step with the scale of the challenges facing the economy. and if the adoption of structural reforms always requires a particular effort on the part of the industries involved in economic, social and political terms in order to achieve the highest degree of consensus possible, such effort is evidently all the more necessary in the current exceptional circumstances. now on to the last matter i shall address today : the situation of the spanish financial system. the spanish financial sector has been affected by the financial crisis since it began, although its effects have undoubtedly heightened since last summer. the current crisis has two characteristics. firstly, it is an international crisis on a large and widespread scale, affecting different markets, numerous institutions in various countries, a wide variety of assets and the real economy. in a further manifestation of the process of globalisation, the problems generated in very specific geographical markets have ultimately spread to most countries, and it is not very realistic to believe that isolation from the crisis may be an option. secondly, the crisis is going to cause an across - the - board reduction