The importance of China to our economy over the past 15 years can hardly be overstated, but with that importance comes risks. A new study by researchers at the IMF looks at the links between the Australian and Chinese economies and examines the risks to Australia from both positive and negative shocks to the Chinese economy – and concludes that the best mitigation is to continue to diversify our economy towards the services sector and also to other Asian markets.

The importance of China to Australia is perhaps best demonstrated by the change in the amount of our merchandise exports that go to that country now compared to 15 years ago.

Back in 2003 China took 7% of our merchandise exports – less than went to Japan and Korea. Now it takes 32.7% – more than goes to not only every other nation, but more than goes to all non-Asian nations combined:

And while the focus of our exports to China generally is on iron ore and coal, the IMF report notes the importance of our services sector – especially tourism and education – as China itself moves towards a more services-consumer driven economy.

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In the past decade the number of Chinese visitors to Australia each year has grown 273% compared to just 43% for all other nations. And with that increase has also come a massive rise in the amount they spend here each year:

A big reason for the increase is not just holiday makers, but students. While students make up just 7% of all visitors they account for 37% of all money spent in Australia – more than any other group:

And because a higher share of Chinese visitors to Australia come for education than most other nations that means overall Chinese visitors spend more on average than those from other nations.

In 2017 Chinese visitors spent on average $6,622 compared to $3,589 for those from India and just $2,934 for those from the UK.

But even though UK tourist here for a holiday spend more on average than Chinese tourists, in all other categories – including business and employment reasons – Chinese spend more on average:

The importance of Chinese students to our economy is highlighted by the fact that while they account for 36% of those travelling to Australia for educational purposes, they spend nearly half of all money in Australia by such visitors:

So clearly there is more to our relationship with China than just mining exports.

And this is clearly evident in the IMF study, which considers three shocks to the Chinese economy – two positive and one negative.

The first involves China shifting faster than expected from a saving to a consumption driven economy. In this scenario, not surprisingly the result for Australia is mostly positive. The study finds that this would lead to a short-term boost to our services sector and while movements in the exchange rate would mean the benefits would be reduced in the long term, overall there is little cause for worry.

The second positive shock involves the Chinese government moving to deal with overcapacity issues and low productivity. This would see it close its inefficient steel-producing firms – which would reduce steel production capacity by 10% – and also reduce its domestic supply of iron ore and coal by 5%. Crucially, this would not reduce the Chinese demand for iron ore and coal, so international commodity prices would actually rise.

Such a move would have two ramifications for Australia. The commodity price rise would be good for our mineral exporters, but because the reduced steel production would also reduce Chinese national income that in turn would see a fall in the demand for tourism and education.

Under this scenario the value of our dollar would also rise – in line with the increase in commodity prices – which would also make tourism and education in Australia more expensive for Chinese.

The study estimates this would also lead to our GDP being slightly lower, but this overall small drop hides a large change within our economy. The mining sector would be fine, but our services sector would suffer a big decline and our national consumption would also fall in line with jobs cuts in the tourism and education sectors.

The final shock is the hardest for Australia to deal with – one where the transition in the Chinese economy does not go smoothly and its productivity growth is lower than expected leading to its real GDP being 5% lower in the long term.

This leads to lower demand for our exports – both minerals and services.

The study estimates however that while our real GDP would fall initially “by about 0.4 percent” it would rebound in the long run. However, this again masks the real struggles that would occur.

Firstly commodity prices would fall – meaning our national income would also drop. But because that our exchange rate would fall, tourism and education in Australia would become cheaper. The problem as China is our biggest market for education and general tourism the rest of the world would have to take up the slack – and those from such nations spend less on average than the Chinese do.

And this is where the study highlights the need for our economy to remain diversified – both in terms of our exports having both mining and services sectors, but also in term of who we export to. The study notes that a faltering China, and the resultant drop in commodity prices would actually provide a boost to other emerging Asian economies.

The report concludes that “China may be Australia’s largest trading partner, but the rest of Asia is also rapidly growing, and is a potential market for Australia’s future expansion”.

While China may have been the great driver of our economy over the past 15 years, the future looks likely to see the rest of Asia take a greater role – something we should be seeking, if only to mitigate the risk should the Chinese economy falter.

• Greg Jericho is a Guardian Australia columnist