Chinese economic shake-up to impact Aussie grains

Chinese economicy shake up - what does it mean for Aussie grains


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China is in the midst of a transformation of its economy and this presents both challenges and opportunities for the Aussie grains sector.

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China is moving away from the export-driven economy that fuelled its stratospheric growth rates over the past 20 years.

China is moving away from the export-driven economy that fuelled its stratospheric growth rates over the past 20 years.

CHINA is looking to reposition itself away from a pure export-based economy to a world leader in trade.

As part of that the Asian powerhouse will look to stimulate world growth, positioning itself as the major trade hub according to China Policy founder Philippa Jones.

Speaking at the Australian Grains Industry Conference last week Ms Jones said the Chinese government recognised it needed to become part of the global trading system and move away from the export-focused economy that fuelled the rampant growth of the past 20 years.

In terms of food policy she said this meant moving away from attempts at self sufficiency to focusing on food security.

There is good and bad news for Australia in terms of the increased willingness to import grain.

As a relatively near neighbour, Australia will have a freight advantage over some key grain exporting rivals.

However, Ms Jones said China was not focusing solely on sea ports.

“There has been a massive amount of investment in inland ports in recent years, with 16 new facilities constructed, more than doubling the grain entry points into China.”

The inland ports are part of China’s ambitious Belt and Road initiative and will create overland transport links between China and Europe.

The improved transport links could potentially be a big boost for key low cost wheat producing rivals of Australia such as Ukraine and Russia.

Ms Jones said China had realised domestic consumption increases will not be enough to keep the economy going and that the export led model was also nearly exhausted.

“It is why we are seeing an increased focus on trade in China across all sectors.”

She said China saw agriculture as a key engine in trade.

In terms of trends, she said Australian exporters looking to see a lifting of restrictions into Chinese markets would be frustrated.

“We hear about the problems with non-tariff barriers, but people need to be aware of the Chinese push for quality.”

“China’s trade strategy is to raise standards domestically.

“They don’t want to be exporting low end manufactured products and at the other end it won’t be buying produce from a country with rep for bad standards.

“It is part of its push to raise its own reputation for quality, and agricultural commodities and issues with non-tariff barriers may be collateral damage as part of this push.”

Ms Jones said agriculture was an easy starting point for the Chinese Government to make statements.

“It is very easy to make political statements with commodities that are perishable,” she said.

However, in positive news for the Australian grains industry she said she expected the strong focus on free trade to continue, creating further opportunities so long as Australia maintains its reputation for quality.

There will also be potential for further Chinese investment in Australian agriculture as part of the Chinese Go Out policy to outward foreign investment.

“There was recently a high level meeting on the Belt and Road initiative in China attended by many world leaders and Daniel Andrews, the Victorian Premier, was the only sub-national representative invited, showing how well received Australia is in China,” Ms Jones said.

The story Chinese economic shake-up to impact Aussie grains first appeared on Farm Online.

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