Good day readers.
I have mentioned many times that the Australian economy is to a significant extent driven by the Chinese economy. We know that China is moving towards a goods and services economy and as such be aware of the potential impact to the Australian economy and by extension the Australian dollar.
Bloomberg provides a good update on the observations of a shift. Read on below.
Australian data show that China’s transition to consumption-led growth is intensifying and helping to boost non-resources industries Down Under at a crucial time for both economies. At the same time, Australia is emerging from a China-fueled mining boom and seeking new opportunities to provide food, services and health products to its biggest trading partner.
“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,” said Paul Bloxham, chief Australia economist at HSBC Holdings Plc. “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.”
China is seeking to encourage consumption following the nation’s rapid industrialization, a transition that will force its communist rulers to cede even more economic freedom to its population. The shift is critical to boost productivity as China seeks to avoid a middle-income trap and regain its place as the world’s top economic power, a position relinquished in the 17th century.
The following charts look at the surge in Chinese demand for Australian food, health products, tourism and education amid an economic shift also underway Down Under.CHART 1: The Australia-China relationship was forged in the steel making ingredient of iron ore to build towers, factories and freeways in the world’s most populous country. The shift in China’s growth drivers is reflected by the soaring share price of Australian vitamins firm Blackmores Ltd. amid the […]