Australia is banking on China’s economy to take off but headwinds are looming

The Albanese government is wary of Chinese economic volatility amid a slumping property sector and shrinking population

If you want a hint at the pace of China’s economic rebound and how it might lift Australia’s economy, look to the skies, says one seasoned Chinese-Australian businessman.

Watch in particular for the expansion of flights between the two nations, especially those run by China Eastern Airlines from Shanghai, China’s financial powerhouse.

“Of China’s ‘gold collar’ people – or high net worth individuals – 80% are from Shanghai,” said the businessman, who requested anonymity given his extensive links to Chinese firms in Australia. “That’s a signal. If China Eastern is not operating many flights, that means trouble.”

The early signs are promising. China Eastern had cut its pre-Covid schedule of 10 weekly flights from Shanghai to Sydney to as few as one, while its 10 runs to Melbourne were suspended entirely – but from 1 February, the Sydney to Shanghai route will be daily, a spokesperson said.

China’s economy, the world’s second largest, is critical for Australia’s fortunes and those of many of its neighbours. China buys about a third of Australia’s exports, equal to those shipped to Japan, South Korea, the US and India combined.

When China reported this week annual GDP growth had slowed to 3% in 2022, its second-worst result since the mid-1970s, the treasurer, Jim Chalmers, declared the slowdown “one of the major economic challenges facing Australia at the start of 2023”.

“The global economy is a volatile place right now and developments in China are a big part of that,” Chalmers said.