how australia supported the growth in chinese tourism to australia

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Chinese Tourism to Australia

1. China has been the world’s number one tourism source market since 2012 . [1] The total annual number of outbound Chinese tourists now exceeds 100 million , [2] leaping from 10 million in 2000. [3] Outbound numbers are expected to double to 200 million by 2020 . [4]

2. At present, only six percent of China’s 1.4 billion-strong population hold a passport . [5]

3. Between 2003 and 2013, 21 million Chinese households reached an annual income level of US$35,000, which makes international travel affordable . [6] The total number of households meeting this threshold is expected to almost triple by 2023, with a further 61 million households projected to join them . [7]

4. Between 2010 and 2015, the total number of Chinese visitors to Australia more than doubled . [8]

5. China is now Australia’s top market. In 2015, spending by Chinese tourists in Australia totaled $7.7 billion [9] (about 22 percent of the country’s total international visitor spending). This compares with: [10]

- UK tourists $3.5 billion (10 percent)

- US tourists $3.1 billion (nine percent)

- New Zealand tourists $2.6 billion (seven percent)

- Japanese tourists $1.4 billion (four percent)

6. Australia’s share of China’s outbound tourism fell from 1.2 percent in 2000 to 0.8 percent now . [11] This compares with: [12]

- South Korea 4.3 percent

- Japan 1.9 percent

- US 2 percent

- Russia 0.9 percent

7. NSW is the most popular destination for Chinese tourists , with 536,000 visiting the state in 2015. [13] 456,000 Chinese visited Victoria [14] and 364,000 visited Queensland. [15]

This fact sheet was prepared by Elena Collinson, Senior Project and Research Officer, Australia-China Relations Institute, University of Technology Sydney.

[1] UN World Tourism Organisation, Media release: Over 1.1 billion tourists travelled abroad in 2014, January 27 2015 http://media.unwto.org/press-release/2015-01-27/over-11-billion-tourists-travelled-abroad-2014 .

[2] China National Tourism Administration, “Top ten news of Chinese tourism industry in 2015”, January 4 2016 http://en.cnta.gov.cn/syhdp/201512/t20151224_755626.shtml .

[3] UN World Tourism Organisation, Media release: China – the new number one tourism source market in the world, April 4 2013 http://media.unwto.org/en/press-release/2013-04-04/china-new-number-one-tourism-source-market-world .

[4] CLSA, Report: Social Pressures – Chinese tourists keep exploring, January 2015.

[5] Dan Reed, “Chinese extend lead as the world’s biggest spenders on foreign travel”, Forbes , January 7 2016 http://www.forbes.com/sites/danielreed/2016/01/07/chinese-worlds-biggest-spenders-on-foreign-travel/#2715e4857a0b493c3e0543b3 .

[6] Tourism Economics, “The Future of Chinese Travel”, March 2015 https://www.ihgplc.com/chinesetravel/src/pdf/IHG_Future_Chinese_Travel.pdf .

[7] Tourism Economics, “The Future of Chinese Travel”, March 2015 https://www.ihgplc.com/chinesetravel/src/pdf/IHG_Future_Chinese_Travel.pdf .

[8] Australian Bureau of Statistics, Overseas Arrivals and Departures, November 2015 http://www.abs.gov.au/ausstats/[email protected]/mf/3401.0/ .

[9] Tourism Research Australia, International Visitors in Australia: September 2015 quarterly results of the international visitor survey, December 12 2015 http://www.tra.gov.au/documents/ivs/International_Visitors_in_Australia_September_2015_Results_of_The_International_Visitor_Survey.html .

[10] Figures from Tourism Research Australia, International Visitors in Australia: September 2015 quarterly results of the international visitor survey, December 12 2015 http://www.tra.gov.au/documents/ivs/International_Visitors_in_Australia_September_2015_Results_of_The_International_Visitor_Survey.html .

[11] CEIC database. The latest available observation is 2013.

[12] CEIC database. The latest available observations are 2013.

[13] Destination NSW, International travel to NSW, year ending September 2015.

[14] Tourism Victoria, International visitation estimates to Victoria by origin, year ending September 2006-2015.

[15] Tourism and Events Queensland, International tourism snapshot, year ending September 2015.

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• Travel Updates

How a strategy change delivered a million Chinese visitors to Australia

THE number of Chinese visitors travelling down under more than doubled from 2010 to 2015. Tourism Australia’s boss reveals how they did it.

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TARGETING China’s rapidly emerging middle class rather than traditional group tours, has helped Australia attract more than a million Chinese visitors in a year.

The tourism milestone was revealed in the Australian Bureau of Statistics’ overseas arrivals data for the 12-months to November which showed a 22 per cent growth in short term visitors from China to 1,001,200.

The massive growth has made China the country’s most valuable tourist market, worth an incredible $7.7 billion a year, and the second largest source of visitors after New Zealand.

Tourism Australia Managing Director John O’Sullivan said the million visitor milestone was the result of an aggressive strategy to move away from traditional group tours and target China’s booming middle class.

“Our marketing, distribution and partnership strategies are all now geared towards targeting this new breed of young, independent travellers with the desire and the financial means to explore our country,” said Mr O’Sullivan.

“That’s where we’re focusing our resources and I’m delighted to say that is what is driving these impressive results.”

Federal Tourism Minister Richard Colbeck said China was “vitally important for Australia’s tourism industry growth”.

“Visitor arrivals from China grew three times faster than the overall increase in the past year, and spending increased 43 per cent – double the previous year’s growth rate,” said Minister Colbeck.

State-by-state, Victoria scored the biggest growth in overseas arrivals in November, with figures up 17 per cent on the same time last year.

Tasmania and New South Wales also achieved double digit growth in international visitors of 13.5 per cent and 10.9 per cent respectively.

Queensland’s share of the overseas visitor market improved 5.2 per cent, South Australia’s 8.2 per cent and Western Australia 4.1 per cent.

Mr O’Sullivan said those Australian tourism businesses which understood and were willing to adapt to the needs of Chinese visitors would derive the biggest benefits.

Chief Operating Officer at Accor Hotels, Simon McGrath said they had worked hard to make Chinese visitors feel welcome and comfortable with touches such as language translations, cultural training for staff and even mini-bar additions like green tea and dry noodles.

“Every key destination around the world is seeking Chinese travellers,” said Mr McGrath, who revealed one in eight Chinese tourists now stayed at an Accor property.

“They want to know they’re welcome, they’re not being treated as a vast group of people but as individuals, and they want safety and security.”

Sydney Bridgeclimb spokeswoman Charli Beale said they began a Mandarin-speaking tour in 2013 and bookings had increased 50 per cent.

“We recognise the significance of the Chinese market, and we’re doing everything we can to make Bridgeclimb appealing,” said Ms Beale.

“For Chinese New Year from February 1 to 21 we’ll be doing a karaoke climb with a microphone and two screens on top of the bridge.”

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Senator the Hon Don Farrell

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Australia set to welcome back Chinese group tours

• Media release

Today Australia has been reincluded on China’s list of approved outgoing group travel destinations.

Australia’s return to China’s Approved Destination Status (ADS) scheme, for the first time since borders re-opened, is welcome news for our nation’s tourism operators, and will provide a boost for the visitor economy, further supporting the sector’s ongoing recovery.

This is another positive step towards the stabilisation of our relationship with China.

Prior to the pandemic, China was the largest and most valuable inbound traveller market for the Australian visitor economy.

In 2019, more than 1.4 million holiday makers from China spent $2.1 billion in Australia, including about $581 million spent by ADS group travel participants.

Australia remains a premium tourism destination for Chinese travellers, and we are looking forward to welcoming back group tours.

Today’s announcement follows the recent launch in China of Tourism Australia’s successful $125 million Come and Say G’Day campaign.

The campaign kicked off on 29 June in China, and is already proving to be a success, with the television commercial receiving over 66 million views across all channels.

We know millions of prospective Chinese visitors are being inspired to Come and Say G’day and we look forward to welcoming more of them to Australia as the ADS resumes.

The Australian Government will now work with Chinese counterparts to facilitate ADS travel.

Media enquiries

• Minister's office: 02 6277 7420
• DFAT Media Liaison: (02) 6261 1555

Great Shortfall of China: Australia's Biggest Tourism Market Returns With a Whimper

Great Shortfall of China: Australia's Biggest Tourism Market Returns With a Whimper

FILE PHOTO: Chinese tourists pose for a photographer (not pictured) near the Sydney Opera House, Australia April 18, 2018. REUTERS/Edgar Su

(Refiles to add full name, company details in par 16)

By Stella Qiu and Byron Kaye

SYDNEY (Reuters) - When China ended a lengthy border closure in January, e-commerce marketer Tianni Ren immediately began planning a team building trip for her 14 staff to Australia, hoping to see its stunning pink salt lakes that had captivated her on social media.

But instead she took her colleagues from the city of Hangzhou to New Zealand after learning Australia was cut from a list of destinations approved by Beijing for group overseas travel, effectively halting a two-decade programme that had helped China dominate Australia's A$45 billion ($30 billion) international tourism market until early 2020.

"We asked our tour agent but were told that Australia was not on the group tour list," said Ren, 28, referring to the Approved Destination Status (ADS) that China gives some 60 other countries. "It is a pity that we did not get to see the pink lakes."

After three years of struggle and anticipation, the widely expected wave of returning Chinese tourists Down Under has turned out to be a trickle as the visa rules - coupled with relatively high costs, a lack of flights and an exodus of Mandarin-speaking guides - squeeze Australia's fourth-largest export industry.

In February, the first full month since China's border reopened, Australia recorded 40,430 short-term visitors from China, government data showed. That was one-fifth the number who visited in the same month in the record year of 2019 and well behind visits from New Zealand, the U.K. and the U.S.

Flights from mainland China to Australia, meanwhile were just one-fifth of pre-pandemic capacity in February, according to aviation analytics firm Cirium, as soaring fuel costs jacked up fares and dented demand.

At the same time, total Chinese outbound border crossings had reached two-thirds of pre-pandemic levels, according to the Chinese Outbound Tourism Research Institute, a consulting group based in Germany.

Beijing did not give a reason for ending Australia's ADS status, but travel industry participants say geopolitics has played a role, with relations at a low ebb amid trade disputes and increasingly strident security rhetoric between the West and China.

Government marketing body Tourism Australia declined to comment.

Trade promotion office Austrade said Tourism Australia's managing director visited China in March to meet strategic partners such as airlines and the body would "continue to work closely with its key distribution partners in the market to realise tourism opportunities between Australia and China".

"It's definitely tied up in geopolitics and trade and other things where we've seen a decline. You can't disentangle that from the current situation," said Paul Stolk, a lecturer at University of Newcastle business school who is working on a university-government collaboration to diversify the tourism sector.

In addition, Chinese travellers often choose destinations where family members are studying abroad, Stolk added. China was Australia's biggest source of foreign students until 2019, but students of other nationalities have filled its foreign student ranks since Australia reopened its border in 2021.

GRAPHIC: Chinese visitors to Australia (https://www.reuters.com/graphics/AUSTRALIA-TOURISM/CHINA/lbvggwzadvq/chart_eikon.jpg)

SUPPLY CONSTRAINTS

    Australia's tourism industry is also constrained by lack of foreign language-speaking guides and essential personnel including coach drivers, industry participants said, as the COVID-19 downturn followed by the lowest unemployment level in decades drew workers to other fields.

"We've lost a lot of quality staff that know their way around," said Peter Shelley, managing director at the Australian Tourism Export Council.

"We're hearing that (Chinese nationals) can't wait to get out and travel after not being able to travel for so long, and Australia has always been a place that has high aspiration to travel, but our capacity to service has been reduced."

Some independent Chinese tourists in Australia told Reuters they were visiting because they had relatives in the country who arranged accommodation and tours, meaning they could bypass the language barrier and other issues.

Justine Chien, director at ADS-approved Sydney tour operator Golden Dragon Travel, said her company has diversified and now caters to solo travellers from elsewhere in Asia.

Travellers from India, for example, returned to 80% of 2019 levels last year and now account for the fourth-largest group of tourists to Australia.

Johnny Nee, Director at Easy Going Travel Services Pty Ltd in Perth, which connects Chinese visitors with hotels and cruises, said his partner organisations had filled the shortfall of Chinese tourists by catering to the domestic market.

    "When Chinese tourists return en masse, I'm worried that the supply will not catch up with demand," he said.

Ren, the marketing director, said her colleagues enjoyed their New Zealand trip where they bought a few Gucci bags, but remained disappointed they missed their first choice of destination.

    "I really do hope we can go to Australia next time," she said. "After all, we cannot stop thinking about the magical pink lakes."

(This story has been refiled to add the tour operator's details and its director's full name in paragraph 16)

($1 = 1.4732 Australian dollars)

(Reporting by Stella Qiu and Byron Kaye in Sydney; Editing by Lincoln Feast.)

Copyright 2023 Thomson Reuters .

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How Australia can capitalise on Chinese tourism

Professor of Sustainable Tourism and Director Griffith Institute for Tourism, Griffith University

Professor at the Institute of Tourism, Griffith University

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The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.

Griffith University provides funding as a member of The Conversation AU.

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Chinese tourism around the world is experiencing a boom: the numbers of tourists are increasing and the types of tourism diversifying. But Australia will need a more culturally sensitive approach than the catchy advertising of old to capitalise on this emerging market.

Australia is competing for this market. It’s not the only country that is trying to benefit from Chinese tourism; in fact Australia is only attracting 1.5% of Chinese outbound travel (rank 15 in the world) . However, China is now Australia’s largest visitor market.

The increase in Chinese tourists is set to continue. Arrivals in 2015 grew by 22% compared with 2014, and in Queensland the growth rate was even higher at 30%. In 2015, the amount that Chinese tourists spent in Australia amounted to A$6.2 billion, 21% of all money spent by overseas travellers, an average of $6,489 per person).

It is not surprising that Government is investing to maximise the economic benefits from this market – especially against the background of a declining resources sector.

How Chinese tourism is changing

A recent Goldman Sachs report on the Chinese tourist boom finds that Chinese outbound tourism has risen from only 10 million in 2000 to over 120 million travellers in 2015. This is expected to growth to 220 million by 2025 (although this includes visits to Macau and Hong Kong).

Expenditure by tourists will grow from US$290 billion to $450 billion in 2025. At present only 4% of Chinese own a passport, predicted to grow to 12% within the next 10 years.

The Chinese traveller is evolving. Until recently most used travel packages, but over the past few years they are becoming more experienced independent travellers . This means that they want interesting and culturally appropriate experiences.

Chinese millennials, a young generation that is well-educated, speaks English and is highly connected through the internet, has attracted particular interest from the tourism industry. Chinese tourists use digital media to plan for their travel but they use different types compared to Australian tourists. Over 90% of Chinese internet users engage in social media, in particular WeChat and SinaWeibo. Weibo, for example, is used daily by over 50 million bloggers .

Australia cashing in

Australia needs to ensure that the “tourism experience” is what Chinese people want. Some other destinations offer better deals, such as the no-visa policy that the Maldives and Fiji have introduced. Open borders encourage more travel .

The tourism industry in partnership with government is busy addressing this. For example, tourism businesses are enhancing their knowledge of digital platforms, learning about Chinese social media channels, and creating Chinese language web pages. Tourism operators are also adjusting their experiences specifically for the Chinese market , to improve the food and dining experiences and to offer more in Mandarin and other Chinese languages.

Going further, there is the potential to attract more Chinese brands to Australia, including Chinese-owned hotel chains that offer very different experiences from traditional Western hotels, Chinese clothing brands, and entertainment experiences that are popular in China. This will improve the satisfaction of Chinese tourists.

But it’s not all a one way street. In order to share the benefits of Chinese tourism it has to be linked to other investment. Often Chinese visitors will holiday in Australia and on their trip look for information about an investment property or business or perhaps investigate schools or universities as places for their children to attend.

Australia can also benefit in terms of protecting its natural environment. One of the main attractions for Chinese tourists is the clean and green environment and native animals.

Chinese visitors could be actively engaged in nature conservation activities. As Chinese travellers become more independent, Australia has opportunities to entice a proportion of them “off the beaten track” to engage with local culture and the environment as well as contributing to economic activities outside the main tourist centres.

Now is the time to plan for how the vast Chinese market can generate the greatest overall value to Australia. This could be by targeting young millennials, luxury travellers, environmental or cultural special interest markets, or any other sub-group that generates benefits beyond the sheer numbers. Planning means we can target particular market segments to maximise the return for Australia.

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Chinese tourists to Australia slow but record Americans head Down Under

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Tourism operators hope Chinese visitors will return in 2023 despite signs of 'turbulent' year for travel

Over the past three decades, millions of Chinese travellers have dined at Harry Sou's restaurants during trips of a lifetime to see the Great Barrier Reef and the Daintree rainforest.  

The COVID-19 pandemic shut down international travel – the lifeblood of Far North Queensland's economy – almost overnight, forcing Mr Sou to close multiple eateries and drastically restructure his business.

While international travel has begun to slowly resume, Australia remains almost entirely closed off to China, its largest inbound market pre-pandemic, which has maintained strict quarantine requirements for inbound arrivals and is only beginning to ease its domestic COVID-19 restrictions  with cases starting to surge .

Visitation from China is 95 per cent below pre-pandemic levels, with the latest visitor survey recording just 62,120 arrivals from the country in the year to September.

"Right now, we're still a long way before we get back to where we were," Mr Sou said.

"We had to totally change our business model. Luckily, we did have part of our business looking after the local [market] so we managed to keep that part going.

"I see the Japanese are coming back but I cannot see the Chinese market is going to come back in a very fast way."

A 'turbulent' year ahead

Domestic travellers have helped prop up businesses over the past year, with the latest figures showing Australian holiday-makers spent a record $4 billion in Far North Queensland alone.

This surge has helped the region climb back to 80 per cent of its pre-pandemic tourism trade, even without almost all its international visitors.

But as more Australians start to head overseas, the industry expects domestic travel to "soften".

"The signs of a turbulent 2023 are already really clear," said Mark Olsen, CEO of Tourism Tropical North Queensland.

"We've got high jet-fuel prices, strong outbound visitation and relatively slow international inbound arrivals and economic headwinds, both in our international markets and here at home."

Mr Olsen said Chinese travellers would "definitely" return in 2023, "but it's not going to be back to the pre-pandemic levels until 2025, 2026".

"And that'll depend on aviation access, the costs of travel and the restrictions associated with travel," he said.

In Victoria, the outdoor museum at Sovereign Hill in Ballarat traditionally drew about 9 or 10 per cent of its visitors from mainland China, equating to between 50,000 and 60,000 people a year.

Sovereign Hill CEO Sara Quon said the slow return of Chinese visitation might begin with "perhaps more independent travellers" than before the pandemic.

"We may see some time before the group tour operators that were in place pre-COVID get back in business and gear up the nature of the businesses that they were running," she said.

Travellers from China were particularly appreciated in the tropical north because they were not deterred from coming during the quieter wet season, which helped balance out seasonal trade.

In Victoria, there's hope large numbers will be returning by the time Lunar New Year arrives in early 2024.

But a research paper published in the journal Tourism Economics this year argued signs of reduced growth in inbound travel from China were already evident before the pandemic.

They attributed that to deteriorating relations between the two countries.

The researchers analysed Australia's 20 largest markets for inbound international visitation to identify where the country could market itself if Chinese visitation were to decline.

Selva Selvanathan from the Griffith Business School said Malaysia, Thailand, South Korea and Indonesia were among the most attractive options, along with Vietnam and India, which have large migrant populations in Australia.

"We found the Japanese tourism market had peaked already and also, if you look at the growth rate among the top 20 tourism markets, Japan has the lowest average growth rate over the last 50 years," Professor Selvanathan said.

"To bring more tourists from Japan, I think the Australian tourism industry has to do a lot of work and it's more expensive.

"However, I think India is one of the promising markets for Australia and also trade as well."

Hope for a diplomatic thaw

India has been the fastest recovering international market, with visitation from the country back to 57 per cent of pre-COVID levels.

"Two summers in a row, we've had really strong visitation from Indian nationals living here in Australia and that word of mouth is really starting to come through and we're hearing that through the travel trade," Mr Olsen said.

Ms Quon said Australia was naturally diversifying its tourism markets by engaging with "those who've started to return strongly".

"I think that'll continue to evolve as a number of different nationalities start to return to Australia and more inbound flight capacity is available from different markets as well," she said.

There is hope though that Australia's bilateral relations with China will begin to improve after some frosty years, particularly after Foreign Minister Penny Wong's trip to Beijing this week , the first by a minister since 2019.

Mr Sou, who was part of various industry delegations to market Far North Queensland in China in the 1990s, was hopeful "softer conversations" between the Australian and Chinese governments would help mend ties.

He has been watching movement between China, Hong Kong, Macau and other nearby nations for an indication of when China might open up more broadly.

"I don't think [travel] policy will be dramatically changed until after Chinese New Year," Mr Sou said.

He warned though that much work would need to be done to rebuild, even once restrictions were lifted, because "a lot of the industry colleagues we used to deal with are already out of business".

"It will be a very different game when we go back in and try to market ourselves and get the visitors back," Mr Sou said.

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As China’s economy stalls, Australia braces for the impact on its currency and tourism market

The plan was to profit from Chinese pandemic recovery, before signs emerged that all was not well

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With strong financial ties to China , Australia is bracing for impact as the country’s deepening economic woes threaten its trading partners.

Growth has stalled in China, as has foreign investment, at the same time as a property crisis worsens, with developers Evergrande and Country Garden facing severe financial difficulties.

Youth unemployment had surged to 21.3% before Beijing abruptly suspended the data series, setting alarm bells ringing.

Australia was planning to profit from China’s pandemic recovery, before signs emerged that all was not well with the major iron ore customer and sender of tourists.

A sharp downturn in China would depress economic growth in Australia, through lower exports and investment, notably in the resources and tourism markets.

Unemployment would rise, and the surging company and personal tax revenues currently swelling the Albanese government’s budget would dramatically slow.

The pursuit of future surpluses, delivered in 2022-23 for the first time in 15 years, would also become a much more difficult assignment.

Veteran Perth-based mining analyst Peter Strachan says that, after decades of strong economic growth, a sharp economic pullback in China might be due.

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“I can’t see why China, after having 30 years of extraordinary growth, won’t come up against some sort of economic or social crisis,” Strachan says.

“This could be it.”

Deteriorating iron ore prices

China is Australia’s largest trading partner, accounting for nearly one-third of its overseas trade, according to government data, underpinned by significant amounts of iron ore, coal, gas and numerous minerals.

Strachan says China’s slowdown will have an immediate impact on Australia’s exports and commodity prices, given its outsized role as a buyer.

“If the Chinese are buying less, they’ll be building less, and therefore buying less iron ore,” he says.

“As the economy slows, they’ll be buying less liquefied natural gas from us as well. I suspect we’re not going to be rushed off our feet supplying iron ore or liquified natural gas to China over the next 12 months.”

Iron ore prices have already fallen heavily from high prices struck over the past two years amid a global slowdown.

“China’s beleaguered property sector shows no signs of improving,” says ANZ, noting the sector consumes more than one-third of the country’s steel output.

“The subsequent weakness in steel demand is likely to put downward pressure on iron ore prices.”

The impact of a mining slowdown on Australia is hotly debated, given there is a high foreign ownership component of large miners and profits don’t necessarily fuel other parts of the economy.

While resources towns can become more affordable during a mining pullback, deteriorating iron ore prices would, however, lead to a reduced tax take. There are also numerous companies that are set up to service miners.

The Western Australia government’s iron ore royalty income also falls when prices and export volumes pull back, which reverberates around the country due to the way GST revenue is shared between the states.

Chinese tourism cratering

As pandemic travel doors reopened, there were hopes China’s high-spending tourists would flood back to Australia – but it turned out to be a trickle.

More people came for short-term stays from the island country of Singapore in 2022-23 than from all of China, according to the Bureau of Statistics.

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The heavily reduced number of Chinese visitors, representing just 17% of pre-pandemic levels, has been linked to a shortage of flights, high air fares and a government ban on group tours; the latter only having just been lifted after Beijing eased travel restrictions.

Grant Wilckens, chief executive of holiday park owner G’day Group, says the property downturn came at a difficult time.

“They’re a massive population base, they were here in droves, and now this is another reason for them not to come, or put off their trip,” Wilckens says.

“The property downtown in China is certainly a concern.”

He says Chinese traveller numbers are down about 60% from pre-pandemic levels at his operations.

Internal travel and overseas tourist numbers are closely linked to wider financial factors, with any weakness in an economy typically leading to a drop in travel. This then affects employment numbers in the tourism sector.

The international student market is similarly affected.

Chinese travel has also been hampered by a series of product bans and tariffs the country started to impose on Australia in late 2020 after bilateral relations deteriorated.

Wilckens says a further easing of trade restrictions could help generate more flights to and from China.

“That actually puts freight into the bellies of aircraft, creating more demand for flights in and out of Australia, with tourists on them,” he says.

A weakening Aussie dollar

The Australian dollar is heavily influenced by iron ore price movements, which means that price weakness in the resources sector usually depresses the local currency, which is seen as a commodity currency and proxy for the Chinese economy.

Last week, the Australian dollar sank to US63.63c , the lowest since last November. The plunge against the greenback is starting to resemble levels last hit in the global financial crisis.

Carlo Pruscino, senior sales trader at CMC Markets, says given currencies act as a barometer of health for their economies, a sustained slowdown in China would probably negatively affect the yuan and Australian dollar.

“If the Chinese slowdown continues, then it could lead to a sustained drop in demand for Australian exports, meaning decreased revenues for Australia,” says Pruscino.

“Offshore investors could shy away from the Australian dollar in favour of less export-dependent countries.

A weaker Australian dollar can help exporters, because their goods are less expensive than rival products from countries with stronger currencies. It’s also a drawcard for international tourists, who benefit from exchange rates.

On the flip side, importers and Australians heading abroad have less purchasing power.

China could still try to stimulate itself out of its economic problems, which would typically lift resource prices, along with the Australian dollar, although some economists believe that runs the risk of Beijing taking on too much debt.

Its trusted model of investing in roads, homes, factories and bridges now makes less sense given how much infrastructure is already underused or vacant.

So far Chinese officials have announced numerous small measures, leaving the market underwhelmed, and iron ore prices and the Australian dollar depressed.

• Australian economy
• Asia Pacific
• Unemployment

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