The Chinese industrial giant is changing shape after the adoption of more accurate measures for the services sector which show services now account for nearly half of the economy.
China now says services account for 47 per cent of its GDP compared to the 40 per cent Western economists once assumed and Peter Quinton, research chief with Bell Potter Securities, says that figure could be as high as 50 per cent.
As a result of the new measures China says its economy is 3.4 per cent higher than previously thought.
The changing makeup of China’s economy has big implications for Australia and a rise in copper prices that accompanied the announcement is a clue as to why.
For the last 15 years the massive growth in China’s industrial economy has seen ballooning growth in demand for iron ore and coal as China builds cities, roads, railways and factories.
Recent collapses in iron ore and coal prices are in large part a result of the tapering of that industrial demand.
But the rise in services mean metals like copper and aluminium will experience demand growth as industries like telecommunications and consumer products take over as growth engines.
Mr Quinton said some Australian companies with potential to profit from the move to services are already positioning themselves in China.
ANZ is aiming to boost its Asian presence and property player Goodman Group is already building warehouses that cater for China’s ballooning e-commerce sector.
Copper prices rose 1.1 per cent after the announcement of the reworked figures because China accounts for 40 per cent of the metal’s demand.
There has been some scepticism among Western economists about the accuracy of Chinese economic figures.
But Mr Quinton said the latest revision should increase accuracy and “the US and Europe revamp their calculations every five years or so.”
Earlier measurement changes saw China’s economy revised upwards by 4.4 per cent in 2008 and a massive 16 per cent in 2004.