an overview of China's economic environment

By

Sara Cheng

Formally Head of International Business, My Business

An overview of China’s economic environment

In the global economic arena today, China has become a world-recognised political and economic power that plays a vital role in international affairs. My Business’s Sara Cheng takes a closer look at the economic environment in China and the opportunities for business.

China’s economy at a glance

The quality of life has improved greatly over the last two decades but its wealth distribution still greatly favours the coastal provinces.

In 2019, China’s GDP grew by 6.1%. The industrial and services sectors continue to grow at the expense of the agriculture sector. The 'non-state' sector, including private enterprise, continues to prosper at the expense of large state-owned enterprises.

China's currency, the yuan, is currently managed as a semi-floated exchange rate within a range around Y6.7 to the US dollar and Y4.9 to the AU dollar. Its comprehensive national strength has grown rapidly, with its gross domestic product (GDP) rising to approximately 45.09 trillion yuan in 2019. 

Today, China is Australia's largest trading partner in terms of both imports and exports: 25% of Australia's manufactured imports come from China. The country also leads the world in terms of manufacturing, accounting for 28.4% of global output.

China’s business economy

China's accession to the World Trade Organisation (WTO) on 11 November 2001 was one of the most significant steps towards re-sculpturing the global economic landscape of the 21st century.

After China’s accession, the country’s service sector was significantly liberalised and foreign investment was allowed with lifted restrictions on retail, wholesale and distribution. This has created a major increase in opportunities for businesses interested in exporting to China.

Continued economic growth in the coming decades will create further opportunities for lucrative trade with China. Austrade identifies several key growth areas for exports to China:

• aged care and healthcare
• agribusiness
• architecture and design
• automotive
• aviation training
• consumer products (personal care, fashion)
• environment and water management
• financial services
• food and beverage
• global infrastructure
• industrial design services
• R&D development services and technology
• startups
• wine.

China business opportunities – risk assessment

The economic situation in China remains favourable largely due to strong domestic demand. WTO entry offers many opportunities and massive foreign investment continues to pour into China, driven by huge market potential and the likelihood the country will continue to win market share abroad.

Though China’s public and external debt is high, its considerable domestic savings and vast foreign exchange reserves should cover these debts. The government must also balance undertaking essential reforms whilst preserving political and social stability. With its valuable assets and quest for modernisation, China is expected to overcome these difficulties and should continue to enjoy robust growth.

Sara Cheng

Formally Head of International Business, My Business

Sara specialises in international business strategy development, international market development, and business investment in China. She has extensive experience in these areas and previously worked for the Australia China Business Council.