Partners in prosperity: The benefits of Chinese investment in Australia
– a report by Deloitte Access Economics for the Australia China Business Council and sponsored by ANZ
Chinese foreign investment can play a very positive role in ensuring Australia’s ongoing economic security and prosperity. Australia rode on the sheep’s back for most of the 19th Century, and today Australia stands to benefit from Asia’s increasing demand for high-quality food products. Continue reading The benefits of Chinese Investment in Australia→
At the end of 2013 Chinese President Xi Jinping announced one of China’s most ambitious foreign policy and economic initiatives, the Silk Road Economic Belt and the 21st-century Maritime Silk Road. It consists of:
The land-based “Belt” – the historic overland Silk Road trading routes that connected China, via Central Asia, to Europe and the Middle East
The oceangoing “Road” – the maritime equivalents to the south, linking China, Southeast Asia, India, Africa and potentially Australia after Chinese President Xi Jinping called in April last year for the alignment of One Belt, One Road with Australia’s northern development plan.
Do you go to lots of events? Hear great ideas but then can’t remember or don’t put into action?
These days it is not uncommon to see audience members on their devices during a speech. We used to think that was rude, but I love the anecdote of the speaker that called out an audience member who was actually tweeting how amazing the speaker was!
The report, produced in conjunction with Monash Business School and the Australian Centre for Financial Services, serves to highlight some of the opportunities that may flow to Australia as a result of “China’s Rebalancing” from an infrastructure investment-led, to a consumer demand-driven economy.
Australia’s Finance and Insurance sector
China presents an enormous opportunity to expand it’s current output, share of the economy and jobs. As a major employer of Australian workers and the largest single contributor to corporate tax receipts, expanding this sector through greater trade and investment with China will have a major flow-on impact for the wider economy.
Some of the key messages for the finance sector include:
Financial services is Australia’s single largest industry contributing more gross value to the Australian economy than the mining sector
China could represent up to 19% of Australia’s financial services export market by 2026
China’s share of the financial services export pie is projected to grow from 11% to 16% in 2026, which will result in the growth of more than 110,000 jobs.
“Like healthcare and education, financial services will be a key driver of Australian economic growth over the next decade”.
Continued Opportunities for Growth
Modelling by the Australian Centre for Financial Studies rebuts the view that China’s softening growth will have a predominantly negative impact on Australian trade. In particular:
China’s demand for Australian exports will grow as it modernises its economy and the middle class grows by an estimated 109 million adults
China will claim just over 31% of Australia’s exports by 2025, up from 28% at present
Close to one million new jobs could be created across the five key industries of financial and insurance services, healthcare and social assistance, education, tourism and construction by 2026.
The future of the Australia-China trade relationship is one of both opportunity and challenge. Key opportunities lie in industries other than mining that align with China’s likely growth profile. The rising Chinese middle class presents an opportunity to broaden and deepen the Australia-China bilateral economic relationship in the generations to come with services already accounting for around 75% of Australia’s economic output and some 85% of employment.
Even with a relatively conservative forecast for Chinese economic growth, China appears set to remain Australia’s dominant trading partner. However, the ability to capitalise on Chinese demand will be contingent on policy decisions, such as visa and investment policy, foreign investment screening thresholds, export finance and insurance.
For more information on the report and it’s implications for Australian businesses, contact community member Tim Hogan-Doran from ShineWing Australia or download the full report here.
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