MANADO, Indonesia - China will need large quantities of Australian raw materials as its industrialization and urbanization race ahead, despite concerns about weak global economic conditions, Australia's Trade Minister Craig Emerson said on Friday.

Emerson also hinted that a fall in the Australian dollar amid the volatility that has jolted global financial markets for the past week was good, saying the strong currency had hurt manufacturing and exporters.

Fresh from a visit to China, the world's No 2 economy and Australia's biggest trade partner, Emerson said he was optimistic about China's ability to continue to grow strongly even as debt concerns threaten the economies of Europe and the United States.

"There's no doubt that China's industrialization and urbanization will continue to require very large quantities of Australian raw materials," Emerson said at a meeting of Asia-Pacific economic ministers in Indonesia.

"We'll have continued demand and rising demand (from China) for basic raw materials, such as minerals and energy, and then to complement that, a growing demand for services in particular."

China's unbridled hunger for raw materials has created a commodity boom and a step-change for the market in the past seven years, with copper rising from around $2,500 to a series of record highs above $10,000 a ton, only briefly interrupted by the global financial crisis.

Iron ore prices have leapt to almost $200 a ton from $32 in 2004.

Companies are also betting big on China's continued demand for resources. In June, Rio Tinto Group, Xstrata Plc, Nyrstar NV and Noble Group all announced plans to merge or expand output or capacity.

Asked about the impact of the global economic turmoil on China, Emerson, who visited the country's fast-developing western region, said he was optimistic.

However, some economists are concerned about a hard landing for China - grappling with its highest inflation in three years - which would send ripples around the world.

At home, the Australian dollar has weakened in recent weeks, coming off a high of around $1.10.

"A high dollar has been hurting our manufactured goods and our exports more generally," Emerson said when asked about the decline.

"What we need to do is build the right fundamentals and that's what we've been doing with fiscal consolidation, with microeconomic reform, with investing in skills, with investing in infrastructure. Governments can do that. Governments don't set the exchange rate," he said. Emerson, who chairs the "Cairns group" of agricultural exporters, said he hoped US policymakers would prioritize cutting farm subsidies as part of efforts to trim the national deficit.

"We've argued for the United States and Europe to cut farm subsidies since I was a little boy, and here's another opportunity," he said.

"There's no doubt that the (US) administration and Congress will be looking for areas of expenditure they could cut. It's an opportunity to do this, to reduce farm subsidies, which will be good for global food security."

Reuters