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The Chinese Presence in Australia’s Economy – RC7 News

The Chinese Presence in Australia’s Economy

Chinese influence in Australia has reached alarming proportions to the point that the country’s growth rate has stagnated due to lack of activities in the commodity market. If Australia is so nervous about growth and its public finances these days, it is because it is facing the end of the “mining boom” that made its fortune between 2003 and 2012.

The appetite of  China’s insatiable demand for raw materials abounds. This setback makes no one happy, except perhaps the environmentalists, who hope to slow the tanker traffic across the Great Barrier Reef. 

 

The Chinese Presence in Australia's Economy

China Relationship With Australia

In 2017, Australian exports to China accounted for 30% of its total exports. Chinese tourism grew by 13% in one year, or 1.4 million people who spent more than 8.7 billion euros. Of the 500,000 foreign students in the country, 30% are of Chinese origin. 

China had witnessed a steady growth since the turn of the 70s. The economy seems more urbanized due to investment in the manufacturing sector. Hence, this created a huge demand for raw materials as well as energy source for transport and electricity. Australia was one of few countries with all the resources the Chinese government required and it became the major source of China’s manufactured goods.

Presently, China is Australia’s longest trading partner in terms of both import and exports. Australia is ranked sixth among Import suppliers and tenth in terms of export. Over 25% of Australia’s total manufactured imports are sourced from China while 13% of its total export are raw materials to China.

Unfortunately, this unsatisfiable appetite for raw material has decreased in recent years. The country is poised to shift its focus from raw materials to finished products. Australia is not well placed to meet this current demand as the Chinese government favors countries close to the sea and with easy access to shipping which notably reduces transport expenditure.

 

Chinese Investments

Australia no doubt relies on foreign investments which represents a key figure in the economy. Despite its long term relationship with China, the Asian nation is only ranked ninth in terms of foreign investors in Australia. With just a meager 3% share of total investment recorded so far.

Under the current administration, the Australian government has witnessed a reversal in fortune. With the Australian dollar struggling, house affordability on the rise, as well as the mining boom coming to an end, the figures are not convincing for investors and they stand a risk of losing profitable investments opportunities. Fortunately, Several Chinese businesses are keen to invest in Australia’s infrastructural projects due to long term partnership with the country.

 

Rivals In The Commodity Market

Ironically, China is Australia’s biggest competitor in the development of manufacturing products. Since the Chinese cut their demands for raw materials, they have moved up the trade in developing their manufacturing industries. The Chines government looks to shift its focus from exports to domestic consumption. As the table looks to have turned, 50% of merchandise imports are currently sourced from China.