China's president may be resetting his country's GDP target to 6.5 per cent growth, bu China will continue to present Australia’s export sector with plenty of opportunities, says HSBC Global Research.
In a recent report by HSBC Global Research – Australia’s next opportunities in China: moving beyond resources – it was recognised that while China’s growth is slowing, “the numbers are still big”.
China’s President Xi Jinping, in announcing the 13th five-year plan (FYP) on Tuesday, said China’s growth target will be 6.5 per cent over the next five years, as reported by Bloomberg.
President Xi Jinping noted that a growth target of 6.5 per cent will be enough to realise the country’s goal of doubling 2010 levels of GDP and per capita income by 2020.
The report argued that perspective is important when looking at the country’s growth numbers.
“China’s economy is now much larger than it was when it sustained double-digit growth rates, which makes it harder to grow as quickly as it did and means that even high single-digit growth rates deliver significant additions to global demand,” the report said.
According to the report, China is approximately 89 per cent larger in US-dollar terms than it was in 2010. As a result, the International Monetary Fund (IMF) has estimated that growth this year will be the equivalent of $US1,028 billion – more than the addition of $US980 billion in 2010 when growth was at 10.6 per cent.
The report also pointed out that China’s shift to a services-led economy is significant.
China has also identified a commitment to “significantly raise” consumption’s contribution to growth, HSBC said.
“As China’s economy shifts its growth from being investment-led to being consumer-driven, Australia’s next growth opportunities are expected to increasingly come for the services sectors,” the report said.
Australia is well positioned to capitalise on this trend as services make up 70 per cent of Australia's GDP and over 80 per cent of jobs.
“We see opportunities for the tourism, education export, agriculture, health, business and financial services industries.”
The report suggested that Australian policymakers and businesses focus on furthering local efficiency and competitiveness to take advantage of these opportunities.
“Australia’s increasing links to the fast-growing Asian economies, particularly China, remain our key reason for our continued optimism over Australia’s economic outlook,” said the report.
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