When China’s President Xi Jinping gives his keynote speech to the Communist Party’s five-yearly congress on Wednesday, he’s expected to send the Chinese consumer a clear message: ‘It’s your turn to be prosperous.’ China watchers expect President Xi to reiterate his vision of ‘the Chinese dream‘ – a promise to hundreds of millions of workers that they’re on their way to the kind of spending power seen in the West in the past half century.
A big part of that affluence, as it was for westerners decades before, is an appetite for air travel and overseas tourism. That presents a huge opportunity for Australia. Last financial year, Australia enticed a bit under 1 per cent of China’s 120 million overseas travellers to our shores, adding $40 billion to the Australian economy, according to Tourism Australia. That’s about a quarter of the export earnings of the minerals and energy industries combined.
But while a cloud hangs over the future prices and volumes of commodities exports, tourism is being buoyed by powerful growth drivers. The Nikkei Asian Review reported on Monday that China’s leadership expects “to lift China’s national income per capita, which was about $8100 in 2015, to around Italy’s $30,000 level” by 2035.
That would give hundreds of millions more Chinese the chance to travel. Around one in 10 Chinese citizens travelled abroad last year, compared with one in three Australians, so a trebling of existing volumes is not difficult to imagine.
An enduring boom
China is not the only booming source of tourists for Australia. South Korean visitors increased by 17 per cent last financial year to 290,000, and Japanese visitors rose 18 per cent to 424,000. Visitors from Canada, the US and New Zealand also surged, contributing 160,000, 730,000 and 1.3 million visitors respectively.
But what makes the China market different is the huge scope for volume growth noted above, plus the surprising fact that Chinese tourists are spending more per person in Australia than any other nationality. The average Chinese tourist spent around $8000 last financial year, compared with Germans spending $5800, Americans $5000 and Japanese tourists spending just $4000, according to Tourism Australia.
If tourism is going to play an ever-larger role in generating Australian export dollars, some adjustment to the national psyche is going to be required. Many Australians, this one included, are nostalgic for the ‘Australia that makes things’ – we still miss the factories that closed from the late 1980s onwards and mourn the demise of end-to-end auto manufacturing.
But for nostalgics, there’s a grim reality to be found in every workplace or home – turn over most objects and you’ll read ‘Made in China’. Those are the goods that will become much more expensive if export sectors outside the mining and energy sectors don’t grow – due to the consequent drop in the dollar.
And the China tourism boom, and the not-unrelated Chinese student boom, are a key part of that transition. So, as President Xi tells his people ‘this is your time to prosper’, some Australians will struggle to accept an influx of Chinese visitors wealthier than their hosts. Such unease, though far from mainstream, is no accident.
Pauline Hanson’s One Nation party continues to stoke fears that Australia is becoming “Asian-ised” (whatever that means), and Australian Conservative leader Cory Bernardi complains of the growing threat of “‘influencers’ bankrolled by the Chinese Communist Party”.
The antidote to those scare-mongering views is that China’s tourists want to visit Australia, not only because of our natural and cultural attractions, but because Australia is an open, multicultural nation, which is safe to travel through and which has a strong rule of law. It’s not so much a question of being ‘swamped’ by Chinese tourists as being heavily tipped by them.
And those export earnings will give Australia more breathing space on the ‘jobs and growth’ front to invest in and develop other export industries of the future – even making stuff again, if we play our cards right.