Down-Under Data Shows China’s Growth Drivers are Making Headway

Australian data shows that China's transition to consumption-led growth is intensifying and helping to boost non-resources industries Down Under at a crucial time for both economies. 

At the same time, Australia is emerging from a China-fueled mining boom and seeking new opportunities to provide food, services and health products to its biggest trading partner. "Australian exports provide clear signs that middle class incomes are continuing to gain and preferences are shifting in China toward service and higher quality food products," said Paul Bloxham, chief economist at HSBC Holdings Plc. 

China is seeking to encourage consumption following the nation's rapid industrialisation, a transition that will force its communist rulers to cede even more economic freedom to its population. The shift is critical to boost productivity as China seeks to avoid a middle income trap and regain its place as the world's top economic power, a position relinquished in the 17th century.

Reserve Bank of Australia Governor Glenn Stevens sounded a note of caution about China in a speech recently: "The real question is how successful they will be in landing a transition to a sustainable but still strong growth model. The truth is that we can't know how all this will turn out. No one has done such a transition on this scale before."