What happens when you mix a close proximity to fast growing nations and an abundant supply of natural resources? An impressive economic boom, but a fear of being highly dependent on a few key nations. Australia is currently enjoying not only a very lucrative demand for its natural resources from China and India, but is also becoming a tourism hotspot for the people of China.
China’s impressive economic growth is well known, but few people realize their impressive demand for the global supply natural resources. China currently accounts for 9.4% of the global economy and 19% of the world’s population, but represents 47.7%, 46.9% and 45.4% of the global demand for iron ore, coal and steel, respectively. Australia is happy to help supply this demand and exports A$65 billion worth of minerals to China every year.
Supplying to China has become a double edge sword, however. As 25% of exports now go to China, those exporters are doing extremely well, but the relationship is having unintended consequences for the rest of the economy. As money flows into the country and the Australian dollar appreciates versus other currencies, it makes it harder for foreign buyers to afford Australian goods. Between decreased demand and the exporting of jobs to China, Australia has lost an estimated 10% of the nation’s manufacturing jobs in the last two years.
One bright spot in the Australian economy is the tourism industry. As economic growth increases personal wealth, Chinese citizens have increased their desire to travel and have turned to Australia to feed this desire. Australia had 500,000 Chinese tourists last year which is up from a paltry 100,000 over 10 years. This increase has been very beneficial to the industry as tourism from Japan, America and Britain have fallen back because of their own weak economies.