After the coronavirus crisis struck in Wuhan towards the backend of 2019, China was naturally the first country to experience the economic impacts of the pandemic. As Australia’s major trading partner, how will China’s economic recovery affect us?
Across China, almost half a billion people were put into some form of lockdown, inevitably having a detrimental effect on it’s precious economy. However, as China’s economy attempts to return to some sort of normality, we have seen an increase in industrial activity. An increase in coal consumption, albeit very slowly, points towards China’s production industry picking up again. It does however, remain a long way off China’s usual consumption, the road ahead is a long and arduous one, but it’s a start.
It will be interesting to see how quickly the Chinese economy can get back to its imposing self.
The well documented rise of China’s economy over the past twenty years is impressive, and it is now one of the most important economies in the world. China’s share of the global GDP is 15%, but because it is growing so massively it accounts for a mammoth 30% of GDP growth.
The world’s leading powers will be intrigued to see how quickly the Chinese economy can get back on track– none more so than Australia. The chart below shows Australia’s dependence on China as a trade partner.
A strong Chinese economy will, in turn, help kickstart Australia’s economic recovery. Chinese tourists spend close to $11.2bn compared to US visitors ($3.7bn) or New Zealand ($2.5bn). Tourism is Australia’s largest service export and brings in $21.6bn a year, making up about 5.4% of exports.
As the modern world as we know it enters truly uncharted territories, it is impossible to envisage the long term implications of travel bans, border closures and the changes COVID-19 will have on everyday life. One thing we do know, is that Australia’s reliance on Chinese tourism and investment is significant.
But as travel bans are lifted, and borders eventually reopen – which they will, will we see a shift in how global economies, Australia in particular, operate.