Are we just China’s quarry and Japan’s beach? Not by several long shots.
It is often said that Australia’s economic future needs to be based on more than being “China’s quarry and Japan’s beach”. This phrase captures a fear that perhaps we will be putting too many eggs in one (or at most two) baskets and will therefore be vulnerable to country or sectoral downturn.
However, most of the evidence available doesn’t support this fear.
First of all, while the growth in our resource exports to China has been spectacular, our potential export success in China is more broadly based than you think.
For example, our agricultural and manufacturing exports have doubled in the past five years, and we’ve seen services exports on the long march too, thanks to growth in tourism, education and financial services.
Around 4200 Australian businesses export to China, 3000 Australian businesses are active there, and the proportion of small and medium sized businesses exporting to China doubled in just two years. Our resources companies have been joined by architects, construction companies, engineers and logistics experts as well as accountants, lawyers and a whole gamut of business services in the China market.
Second, in terms of tourism, we are in little danger of being just Japan’s beach. Our sources of international visitors are diversifying and the tourism industry is less reliant on Japan than it has been in the past. China and India and the rest of Asia are an important source of visitors along with newer markets such as the Middle East.
In addition, the Japanese market is becoming more sophisticated due to Japan’s unique demographics with an ageing, more feminised population. Japanese tourist activity is no longer confined to three-day gold and karaoke bashes on the Gold Coast by over-worked salary men.
Third, it’s not just China that’s buying our exports – it’s the emerging markets in general. The Australian export story over the past decade is really “China plus”. According to UBS research, Australia’s share of goods exports to developing countries has risen from 53% from 43% 10 years ago.
UBS nominates India, South Africa, PNG, and the United Arab Emirates as key markets to watch for Australian exporters. It’s also noticeable that a lot of Australia’s trade action is now occurring outside the G7, and given that the developing world is increasing its influence in terms of contributions to global GDP (see graph, the lucky country has made its own luck again.
In short, Australia is not just China’s quarry and Japan’s beach – our export destinations of choice stretch from Dubai to Durban and Port Moresby to Puna.
*Tim Harcourt is chief economist at Austrade and author of The Airport Economist www.austrade.gov.au/economistscorner
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