Where will China’s growth be located?
24 June 2015
The latest report from Deutsche Bank Research (11 June 2015) points out that while all 31 provinces have been affected by China’s economic slowdown, regional differences are substantial. Notably, foreign direct investments have made an impact on incomes in inland regions, with third-tier cities such as Leshan (Sichuan province) or Yulin (Shaanxi province) expected to account for the largest increase in China’s upper middle class population by 2022, reaching 30% of China’s total middle class (from 15% in 2002).
Economic growth has proven relatively resilient in the coastal provinces, such as Guangdong, Zhejiang and Shanghai, with these regions still among China’s richest – but their lead is diminishing. About 44% of Australian beef exports to China have been shipped to major ports in these provinces so far in 2015, compared to 32% in 2014. On the bright side, provinces of Xinjiang, Tibet and Guizhou continued to record high growth in 2014, while city-states Beijing and Shanghai’s has been much more modest.
For Australian sheepmeat, provinces in northern China are still major markets, where roughly 95% of shipments have been discharged so far in 2015. In 2014, growth declined most in the Northeast’s ‘rust belt’ provinces of Jilin, Liaoning and energy-producing Heilongjiang (where one of China’s largest oil fields is located), and in those reliant on bulk materials such as Shanxi and Inner Mongolia. Notably, inland provinces which had bumper growth during the global financial crisis now face the largest loss in momentum. China’s long-term economic growth and regional policy will be important in determining major markets for Australian red meat over the coming years.
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