Inspired by Sam Volkering and Harje Ronngard of money morning
The 4 areas in Australia that should benefit significantly from CHAFTA (China Australian Free Trade Agreement) are Healthcare, Agriculture, Copper (BHP) Tourism and Property
Taking the place of iron ore , lng and coal
Because of the one child policy set in the 1970s, China went from one of the fastest growing nations on earth, to one of the fastest greying nations.
At present, it only has 1.8 nurses for every 1,000 people. That’s way below the OECD average of 8.8/1,000.
The ChAFTA will help Aussie providers take advantage of this opportunity. It’ll give providers free reign to set up business in China, opening up a market of 120 million potential customers.
The Chinese government is embarking on building 7,500 new public hospitals over the next 10 years. How can Australia help?
The ChAFTA gives Australian providers access to acquire and run hospitals in three municipalities. Beijing, Tianjin and Shanghai.
And there’ll be opportunities for business in four other Chinese provinces.
Pollution and related illnesses
In China, there are 4,000 people dying every day due to pollution related illnesses. That accounts for roughly 20% of all deaths.
Equally, China’s home to the most avid smoking population in the world. It’s the largest manufacturer and consumer of tobacco globally. Chinese smokers consume one third of all cigarettes. In 2012, that worked out to an average of 1,711 cigarettes per person in China. This is breeding a new set of illnesses.
Heart disease is on the rise. As is obesity and cancer.
China is relatively inexperienced in dealing with these illnesses. Yet Australian healthcare providers are among the best in the world.
In 2012, China set aside just 5.4% of GDP for healthcare spending. That was less than the OECD average of 9.3%. And less than a third of what the US spends on healthcare, at 16.9% of GDP. Chinese spending on healthcare is US$480, lower than the OECD average of US$3848 a year.
The Chinese government will have little choice but to do exactly that. Demand for healthcare is going to keep rising in China. And not just for years, but decades.
Unlike mining, the demand for healthcare will not stop!
In the future, China will increasingly need expertise in this field. High quality Australian healthcare providers will be able to serve China’s ageing population.
And the ChAFTA which came into effect Dec 15, is our shoe in
If nothing else, the healthcare sector will be one to watch out for on the ASX over the next 12 months.
Where once we relied on the mining for our prosperity, we’re looking towards healthcare for the next boom.
Chinese demand brings boom to agricultural sector
Chinese consumers love buying foreign products, and they live buying it online….. and what they want is agricultural products.
WeChat(a Chinese popular messenger), and Ali Baba (China’s answer to Amazon) is being used as an online market place, enabling our Australian entrepreneurs access to their markets. Ali Baba’s CEO Jack Ma was in Australia discussing this opportunity!
Small exporting businesses are scouring the Australian market place. All wanting to capitalise on China’s demand for beef, dairy and infant milk.
China is going through an economic shift as well as a cultural shift. The Chinese diet now consists of more meat and dairy than ever before.
And by 2020 China import $150 billion dollars of meat annually. Over the last few years China’s imports for meat have rapidly increase. None more so than beef, highlighted in green in the below graph:
Surveys have highlighted the rapid growth in dairy consumption. Expectations have been eclipsed by what we have seen in recent years. Some are calling it the golden era of prosperity for the Australian dairy industry. And it’s likely to continue. It’s expected that demand will further increase in the next few years. China’s demand will provide opportunities for international producers.
China is already Australia’s biggest trading partner. And with demand for agricultural products set to rise further, Australia could experience another boom. Not a commodity boom, but an agricultural boom.
Chinese increased consumerism brings boom to Copper
Since 2005, Australia has experienced tremendous growth due to the mining boom, But over the past few years there’s been a bit of a bloodbath.
However, there will be one commodity that will surprise Copper!
Cooper is needed from its use in consumer-end products.
China has been transforming over the past few years. They have moved from an industrialised economy to a consumerist society.
Finished products are what China wants. And what’s helping along this consumerist mentality? China’s newly rich and the rise of their middle income class.
The predicted values speak for themselves. China is expecting their population’s wealth grow more than 400% in the next 30 years.
And there could be a way to capitalise on China’s buying habits. Electronics and home appliances will be just some of the products demanded by the newly rich. Yet this is a natural progress of developing economies. As income increases people spend more on consumption.
The graph below shows the actually and forecasted increases in private consumption and investments. What is interesting about the below graph is that while disposable income increases consumption, not investment, will increase.
With both consumer goods and infrastructure set to rise, China will need more copper wire. Around half of the copper mined is used to manufacture electrical wire. Maintaining China’s energy demands will also require copper wiring.
Australia’s biggest miner, BHP Billiton [ASX:BHP], has already placed long-term bets on copper. The graph below shows the projected copper consumption into the next two years. China’s consumption is expected to eclipse 25,000 tonnes of copper.
BHP has repeatedly said they are working to increase copper production. BHP’s copper division head, Daniel Malchuk, believes the long-term fundamentals of copper are positive.
China wants less dirty coal and more copper.
2017 might just be the year that copper starts its resurgence.
Property and Tourism
Chinese wealthy wanting to visit and invest in Australian Property
We can see the effect that the increased wealth and prosperity of Chinese has had on the Australian tourism and property market.
This does not seem to be abating