Xi Jinping is second only to Donald Trump in global power, and he has just told us what he thinks will be his country’s future. The title of his 3½ hour speech to the 19th congress of the Communist Party of China was: “To secure a decisive victory in building a moderately prosperous society in all respects and strive for the great success of socialism with Chinese characteristics for a new eraâ€.
Chinese people have an ever-growing need for a better life, but China’s unbalanced development was constraining this, Xi proclaimed. Structural reform would see China focus on quality growth, and move into advanced manufacturing, big data, innovation, consumption industries and “the green and low-carbon economy”. The environment received more mentions in the speech than the economy. Iron ore and coal top the list of Australian exports to China. The shutdown of Chinese steel mills this month and coal bans in cities, in an air pollution crackdown, has impacted iron ore prices. However, Treasurer Scott Morrison was recently told China’s environmentally-driven structural reforms are unlikely to impact on Australia’s higher grade of coal and iron ore.
In healthcare, the Chinese government will support the development of private hospitals and an aged care industry. This is significant for Australian companies, because the China-Australia Free Trade Agreement (ChAFTA) allows wholly Australian-owned hospitals to be established in the three biggest Chinese cities, while wholly Australian-owned aged care institutions can be established with no geographical restrictions.
But Australia’s education export sector, driven by Chinese students paying large fees, should note that China will prioritise strengthening domestic education. China will “move faster to build Chinese universities into world class universities”, and support the development of private schools.
Chinese investors are already the biggest group of foreign buyers in the Australian real estate market, according to the Foreign Investment Review Board. As a group, they spent $32 billion in 2015-2016 alone, mostly in Sydney and Melbourne, four-times the amount US residents spent. With a quarter of new homes in Sydney purchased by Chinese investors, any change in Chinese housing policy should be noted for flow-on effects.
The federal Labor Party is considering signing up to China’s Belt and Road Initiative (BRI) if it reaches government, though it hasn’t made a decision yet. Signing up to the BRI, in principle and in the abstract, means endorsing its somewhat problematic geo-strategic objectives, yet every project would still need to be evaluated on a case-by-case basis.
