China is now Australia's largest trading partner, continuing to increase its relative importance. Its growth and structural change have been the major determinants of the conditions under which Australia relates to global markets for goods, services and capital. China has been a labour surplus economy. Over the past half-dozen years, China has entered the turning point in economic development, in which labour becomes scarce, real wages rise rapidly, the surplus of savings over investment falls and there is some easing of growth rates in sectors that use resources intensively. This changes the nature of Australian opportunities in China.