The growing number of Chinese middle-class consumers highlights business opportunities across tourism, education and manufacturing, according to Treasurer Wayne Swan.
In his weekly economic note, Swan says as living standards improve in China and other parts of Asia, demand will increase for tourism, education and high-end goods.
Swan believes China has the ability to fuel its economy through domestic demand if its major export markets dry up.
“China has the policy flexibility to fire up its domestic engines of growth if external conditions fall sharply… Capital investments, rather than exports, are increasingly driving China’s economy,” he said.
In recent years, about half the nation’s growth has come from building infrastructure such as roads, bridges and homes, while in the past 30 years, investment as a share of gross domestic product had risen from 35% to almost 50%.
Meanwhile, rising living standards are creating new ranks of middle-class consumers. According to Swan, this has implications not only for China’s economic growth but for the Australian economy, arguing demand will extend well beyond Australia’s resources.
“The new ranks of middle-class consumers in China and the rest of Asia will increase demand for more than just our mineral wealth,” he said.
“It will also benefit Australia’s tourism operators, education providers and manufacturers of high-end goods.”
According to Austrade senior trade commissioner Christopher Wright, there are now 50 million Chinese people considered middle-class, which is more than twice the size of Australia’s.
“This story has a long way to go yet… What you’ve seen so far is only the beginning,” Wright says.
“China is the sort of market where you can sell anything once. It’s quite simple to find someone here who will give your product a run.”
“If it doesn’t sell, they will drop you. They’re very pragmatic. If you’re successful here, the upside is dramatic.”
Earlier this year, Australian Industry Group and Asialink released a report titled Engaging Asia: Getting it right for Australian businesses, based on a survey of 380 local businesses.
The report revealed 74% of respondents indicated an interest in expanding into Asia, with almost 50% actively planning expansion within 12 months.
Of the businesses with current dealings in Asia, 56% rated at least one of their Asian operations as “extremely important” or “highly important” to their overall business success.
China was rated as having the most impact on business success, with 69% of businesses with operations in China saying it is important to their overall performance.
However, Australian companies could soon face increased competition from the United States, with a foreign policy official claiming the US needs to strengthen its Asian ties.
Kurt Campbell, US Assistant Secretary for East Asia and the Pacific, says the United States need to “effect a transition from the immediate and vexing challenges of the Middle East to the long-term and deeply consequential issues in Asia”.