Finance Finance News Australia’s China boom is busting – and it’s not because of iron ore

Australia’s China boom is busting – and it’s not because of iron ore

Michael Pascoe
Australia's China tourism boom has gone stale, and it's not looking good. Photo: TND
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Iron ore prices are bouncing higher again, but the key employment generator in Australia’s China boom ride is flatling – Chinese tourism has stalled.

The combination of Chinese demand, reduced Brazilian production and a weaker Australian dollar has delivered a trade bonanza, lifting the GDP growth count and providing windfall tax income for a federal government budget surplus.

But it’s the services side of our China trade (tourism and education) that does most for job creation here – and there’s been no effective growth in Chinese visitor numbers for two years.

Monthly short-term arrivals from China first broke the 120,000 count in July 2017 when 123,500 arrived. The monthly total has remained around 120,000 ever since. Australian Bureau of Statistics figures this week showed 122,300 Chinese visitors arrived this July – 15 per cent of all visitor arrivals.

For the latest financial year, Chinese numbers grew by less than 1 per cent to 1,433,000 – only just ahead of the 1,407,000 New Zealanders.

(Whether flitting across the “dutch” to visit the cousins really counts as international tourism is another matter.)

When China first overtook New Zealand as our biggest single source of visitors, it was the culmination of a massive decade-long surge, a 300 per cent rise as middle-class Chinese took to the skies.

The expectation in tourism circles was that that surge had a long way to run as the Chinese middle class continued to grow. While the numbers were large, Australia was not even gaining a particularly large share of the Chinese tourism market.

It could be worse – the numbers could have been falling the way they are in much of south-east Asia. A Bloomberg story last weekend recorded falls in Thailand, Vietnam, Indonesia and Singapore.

“From quiet beaches in Bali to empty rooms in Hanoi’s hotels, pangs from China’s economic malaise and weakening yuan are being felt across Southeast Asia’s vacation belt,” Bloomberg reported.

“A boom in Chinese outbound travel in recent years that stoked tourism across Southeast Asia is now in reverse gear. The abrupt decline of Chinese travellers is becoming a painful lesson for nations such as Thailand and Indonesia that had become overly dependent on Asia’s top economy.”

Expectations of the boom continuing have seen rapid growth in new hotel developments in the region.

The good news for Australian tourists might consequently be cheap rates in Asian resorts. That wouldn’t make up for the domestic bad news if the current plateau at home turned down.

The Australian Financial Review’s China correspondent reported in June that Chinese travel agents, for the first time in years, were not increasing the number of forward hotel bookings they made in Australia in 2019.

“Travel agents in China and analysts also warn that Australian tourism is vulnerable to any moves by Beijing to ‘weaponise’ its services industry, after it issued a travel warning for its citizens going to the United States in retaliation against Donald Trump’s trade tariffs,” the report said.

It underlines the tightrope Australia needs to walk between our key economic partner, present and future, and a febrile American administration.

Fortunately for the overall Australian foreign tourism industry, other markets have been growing while China has not.

There were 2.6 per cent more Kiwis in the latest financial year and 3.1 per cent more Americans (our third-largest market with a respectable 812,000 still looking for shrimps on barbies).

The strongest growth was recorded by an old favourite and an emerging tourism power. Japan and India arrivals were respectively up 9.5 per cent to 484,000 and 11.1 per cent to 372,000.

P.S. A sidelight to the figures is how much more attractive Australia – or perhaps Australians – are to women than men. Female visitors outnumbered males by 4.9 million to 4.5 million thanks to peaks in women in their 20s and 50s.

It’s well-known internationally that Chris Hemsworth and Hugh Jackman are just average Aussie blokes.

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