Australia's exports to China could double to $250 billion in just 15 years, according to a new report.
The report, conducted by ANZ Research, predicts China’s rapidly rising middle class will drive the export boom – despite a growing concern about China's slowing economy.
The report titled Sleeping Giant: China’s Consumer, estimates an additional 300 million middle class consumers will populate China’s urban areas by 2030, presenting a massive opportunity for Australian exporters.
This group will more than double its spending, the report predicts, lifting China’s consumption as a portion of GDP to nearly 50 percent – up from 38 percent in 2014.
That would take China's consumption above the current economic output of the US.
ANZ said urban disposable income per capita in China will reach around $A46,000, up from $A11,000 in 2014.
ANZ chief economist Warren Hogan says this will open up new export opportunities for Australia, particularly in tourism, education, financial services and healthcare,
Agricultural exports are also expected to grow strongly, driven by China's urbanisation and improving living standards and Australia's reputation for producing high quality, safe food.
Diminishing demand for natural resources
"Australia needs to adapt to China's new growth model by moving towards service exports, as well as opportunities in agriculture and manufacturing," Mr Hogan said.
ANZ's report also warns that the rebalancing of China's economy will diminish demand for Australia's natural resources.
Economic changes will also require reforms to increase China's household income and precautionary savings, including initiatives to widen medical insurance, reform pensions and amend labour laws.
ANZ CEO International and Institutional Banking Andrew Géczy said: “Growth in spending by China’s middle class will not only transform China’s economy and place it on a more sustainable path but will rebalance the global economy.
New export opportunities
“As China moves to a consumption-led economic model and spending power increases, new export opportunities will emerge for Australian businesses particularly service providers, in tourism, education, financial services and healthcare.
“These opportunities will be supported by the recently signed China–Australia Free Trade Agreement, Mr Géczy said.
“Volatility in China’s stock market, uncertainty about the RMB’s outlook and downward revisions to China’s growth forecasts have recently raised questions about China’s vision for the future.
“However continued momentum of economic and financial reform is the first-step towards a more open economy and it is ultimately fundamental to a rise in Chinese consumption.”