China market overview
The largest market located in East Asia, China is the world’s second largest economy and predicted to overtake the USA to become the world’s largest economy in the near future.
Exports and investment have underpinned this growth for several decades, and the Chinese Government is encouraging a transition to services and consumption, described as the ‘dual circulation’ strategy, while pursuing more sustainable development to maintain high levels of growth.
China is home to the world biggest population – an estimated 1.404 billion. With rising disposable incomes, demand is growing for safe food and a higher protein diet, quality health care and education, more sophisticated products and services, more liveable cities, a cleaner environment and the opportunity to travel.
As well as being a key destination for international investment, China is perhaps the world’s third largest source of investment, with infrastructure being a key focus for this investment.
China’s digital ecosystem is arguably the most sophisticated in the world, with more than 850 million internet users, and a quarter of the world’s startups valued in excess of a billion dollars. Mobile payment penetration is triple that of the United States.
China is digitising critical industries and will continue to move up the advanced manufacturing value chain. Significant government investment will reinforce its leading global position in a range of sectors.
China is shifting to net zero emissions and its renewable energy and zero carbon emissions targets will revolutionise its domestic economy and change its international trade.
Queensland and China
China is Queensland’s largest trading partner, export market and import source – its largest source of international students and tourists, and an important investor in the state. Queensland and China also share strong community and cultural links.
China has consistently been Queensland’s largest export destination and, import origin, since 2012–13.
China plays a critical role in supplying components and supplies for Queensland’s manufacturing industry and has emerged as our largest partner for translational research and research publications globally.
The China–Australia Free Trade Agreement (ChAFTA) has enabled Queensland businesses to benefit from agreed tariff reductions when exporting products to China, including:
- agricultural products and processed food
- engineering goods and services
- manufactured products.
The impact of COVID-19 on the economy, air freight and supply chains as well as Australia’s ongoing bilateral tensions with China have accentuated the complexities of Australia and Queensland’s trading position.
Queensland’s exports to China are experiencing disruptions including rapid changes in demand, uncertainty regarding international freight and logistics, and reduced capacity of domestic logistics and supply chains in China.
As well, importers are experiencing delays in receiving goods from China, affecting their downstream supply chain.
However, China’s growing middle class and proximity to Queensland continue to offer significant opportunities for Queensland companies.
China is an important source of investment into Queensland, particularly in its tourism, mining and agricultural sectors.
The implementation of the China–Australia Free Trade Agreement (ChAFTA) is stimulating Chinese investment in a number of strategic industries, including agribusiness, health care, and the high-tech and renewable energy sector.
China is shifting its economic model from ‘quantity growth’ to ‘quality development’ and Chinese companies are increasingly investing in sectors beyond resource extraction.
Combined with the continuing growth in personal incomes and the number of educated people, this will see China’s services sector become increasingly important, creating opportunities in:
- niche food products
- renewable energy.
With a focus on food security and internationalisation, China’s expected US$1.25 trillion in outward direct investment over the decade to 2025 makes it a target for investment attraction across a range of sectors.
- Food and agribusiness
- Education and training
- Direct investment for agribusiness, health care and renewable energy
- Lifestyle products (food and services)
- Aged care and health care
- Renewable energy
- Resources and energy
- Research and development collaboration
- Incubator and creative technology
- Smart cities
- Advanced manufacturing
- Asialink Business: China
- Austrade, Doing Business – China, Doing business – China – For Australian exporters – Austrade
- Austrade, Market Information Package for Australian education institutions
- DFAT, China–Australia Free Trade Agreement (ChAFTA)
- DFAT, China Market Insights 2021, Market Insights | Australian Government Department of Foreign Affairs and Trade (dfat.gov.au)