AUSTRALIA (Commonwealth Union)_ The Albanese administration is concerned by Chinese economic volatility, which is exacerbated by a collapsing property industry and a diminishing population.
Look to the skies for clues about the pace of China’s economic recovery and how it might affect Australia’s economy, says one seasoned Chinese-Australian businessman.
Keep an eye out for the expansion of flights between the two countries, particularly those operated by China Eastern Airlines from Shanghai, China’s financial powerhouse.
“Of China’s ‘gold collar’ people – or high net worth individuals – 80% are from Shanghai,” claimed the businessman, who asked to remain anonymous due to his strong connections to Chinese enterprises in Australia. “That’s a warning sign. If China Eastern isn’t flying frequently, there’s a problem.”
The early signs are encouraging. China Eastern had reduced its pre-Covid schedule of 10 weekly flights from Shanghai to Sydney to as few as one, while its 10 flights to Melbourne were cancelled entirely – however the Sydney to Shanghai route will be daily beginning February 1, according to a representative.
China’s economy, the world’s second largest, is important to Australia’s and many of its neighbours’ fortunes. China purchases over one-third of Australia’s exports, which are comparable to those supplied to Japan, South Korea, the United States, and India combined.
When China reported this week annual GDP growth had slowed to 3% in 2022, its second-worst result since the mid-1970s, the treasurer, Jim Chalmers, branded the slowdown “one of the biggest economic difficulties facing Australia at the start of 2023”.
“The world economy is in a state of flux right now, and changes in China play a significant role in that,” Chalmers added.
Global banks such as Morgan Stanley are more hopeful, since recent developments have “far exceeded our expectations”. “The reopening [of China’s borders] occurred earlier and more quickly,” it stated in a briefing note on Thursday. “Housing rescue operations have become more coordinated and strong.”
