Surge in Chinese demand is helping Australia as its food, health, tourism and education sectors are witnessing robust activity. China's economy transitions from infrastructure investment to consumption-led growth is showing up all over Australia.
The Chinese economic satellite 4,000 miles from Beijing is indicating that a remodeling of China's economic growth is underway. The latest Australian data reveal that China's economic transition to consumption-led growth is boosting its non-resources industries. This is a very crucial support for Australia at a time when the economy is reeling under pressure.
Bloomberg reports that Australia is emerging from the China-led mining boom and exploring new opportunities for providing food, services and health products to the dragon country. China is Australia's biggest trading partner. Majority of Chinese people are consuming vitamin tablets, food and beef from Australia. China is also encouraging consumption amid industrialization.
Paul Bloxham, Chief Australia Economist at HSBC Holdings Plc, said "Australian exports provide clear signs that middle-class incomes are continuing to gain and preferences are shifting in China toward services and higher-quality food products. The time-frame for China's transition is large, a decade or more and it won't be easy. But the fact it is already underway is positive."
The Australia-China relationship is strong in steel making input iron ore. Chinese are creating more demand for Australian health supplements and baby formula. The growing middle-class wealth in China is further creating demand for Australian health supplements and other nutrient products. Australian beef is in more demand at Chinese restaurants as well. Australian meat exports stood at A$15 billion in 2015.
Meanwhile, Australian companies are doing well on local stock markets as Chinese demand is boosting their business. China is Australia's major trading partner. As the dragon country's economy is showing signs of improvement, it's bringing cheer to Australian stocks, further adds Reuters.
However, Glenn Stevens, Governor, Reserve Bank of Australia (RBA), gave a cautious note about China. "The real question is how successful they will be in landing a transition to a sustainable, but still strong growth model. The truth is that we can't know how all this will turn out. No one has done such a transition on this scale before," said Stevens.
Tourism is another segment of China that's boosting revenues for Australia. The number of Chinese visitors to Australia in 2015 was one million. This is from mainland only. Mainlanders are set to surpass the number of visitors from Hong Kong as well. Robust Chinese tourism is boosting Australian retail segment also, with increasing 20 percent visitors annually. They're spending on average $7 billion to $8 billion, as reported by Business Insider.
Here comes the next segment that's adding wealth to Australia -Chinese students are entering Australian universities in a large numbers. The weakening of Australian currency is also attracting Chinese students. Australia is also offering family reunion program for students to bring their parents and obtain citizenship as well.
Australia's net services exports are increasing. Its net services exports were a negative -0.5 percent on gross domestic product (GDP) four years ago. Now, the net services exports contribute 0.5 percent to Australia's GDP. This is in turn helping housing investment in Australia, further strengthening its domestic economy.
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