WEEKLY E-MAIL

25 January 2023

CHINA’S REOPENING EFFECT ON AUSTRALIA’S ECONOMY

By Jonathan Toh

On the 8th of January 2023, China announced the reopening of its borders for international travel after 3 years of Covid-19 closure. This begs the question, what kind of implication could this have on the Australian economy?

According to a report conducted by JPMorgan, sectors that stand to gain the most from China’s economic reopening would be the tourism and education sector given China is the largest consumer of these two exports. JPMorgan further suggest that a full recovery across these sectors could add up to 1 percentage points to Australia’s Gross Domestic Product (GDP).

In 2019, 15.3% of all Australia’s inbound tourism were from China, making it one of the largest sources of short-term visitors, however, according to the data from the Australia Bureau of Statistics (ABS), China did not even make it to the top 10 list of countries where tourist came from for the same period in 2022.

Data from ABS also highlighted that a total of 430,470 short-term trips were made to Australia in October 2022, which is 44% lower than the figures on the same month in 2019. The reopening of China will likely provide a significant boost Australia’s tourism industry, and a full recovery to pre-pandemic levels could add up to 0.5 percentage points to the country’s GDP.

JPMorgan also noted that international student enrolments is expected to accelerate this year. Data from the Australia’s Department of Education showed that more than 253,000 international students arrived from China between January to October 2019, comparing to the same time period in 2022, the number fell to approximately 173,000.

International students from China make up 26% of total enrolment, the largest portion from a single country. “If education exports to China revert to 2019 levels, the impulse to real GDP would total 0.4 percentage points” – Tom Kennedy, JPMorgan’s chief investment strategist.

Jonathan Toh
Associate Financial Planner
Authorised Representative No. 1284667

If you have any questions or comments, please email me at jonthan@gfmwealth.com.au

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