Western Australia is well used to the volatility of the boom-and-bust mining cycle, which underpins the state's economy.

But the WA state government says China's plummeting demand for iron ore is a reminder of the state's economic vulnerability, with iron ore prices hitting their lowest level in nearly two years. But Rod Campbell from the Australia Institute says the economic impact of the price drop isn't as significant as many fear.

• Guest: Rod Campbell, Resource Economist, The Australia Institute