80% of exports to go to Asia by 2020
About 80 per cent of Australia's exports will go to Asia by 2020 as the region's growing middle class demands high quality food and education and looks to holiday overseas.
That's the prediction of a new report by HSBC Australia chief economist Paul Bloxham, who says Australia's trade and financial links to Asia will only increase in the future.
Mr Bloxham said trade with Asian counties was increasing rapidly and the region already accounted for 73 per cent of Australian exports, up from 50 per cent in 2000.
The biggest winner has, of course, been the resources sector and Mr Bloxham expects exports from that sector to continue to grow rapidly.
He's forecasting iron ore exports to rise more than 50 per cent by 2020, while LNG exports are expected to more than quadruple as new production comes on line.
And he says agriculture, education and tourism will be the beneficiaries of the next wave of Asia's transformation as increasingly wealthy populations spend their money on good food, education and holidays.
Mr Bloxham said the number of Chinese tourists travelling to Australia had doubled in the past four years, enrolments of international students was on the up and there was increasing interest in dairy, meat, sugar and edible oils.
"As counties get richer they demand more of these finer foods so that should offer Australia with opportunities," he said.
Demand for safe, high quality food has been increasing in Asia in the past few years, especially in China where consumers have been spooked by a string of scandals, like the melamine milk scandal that affected more than 300,000 children in 2008.
Gavekal Dragonomics China consumer analyst Ernan Cui says foods labelled "organic" in China can now fetch 10 times the price of non-organic food, a significantly higher margin than that seen in western countries.
"From the consumer side, more and more people are getting concerned about safety in food consumption, and would like to pay higher premium for foods that they believe with better quality," she said.
Ms Cui said the organic market in China is now 12 times the size it was six years ago and Chinese investors had been looking to countries like Australia for "safe" food, especially meat and dairy products.
Some recent examples include Shanghai Zhongfu Group, which is investing $700 million to develop Western Australia's Ord River irrigation area and New Hope Group, which in 2013 bought the country's fourth largest abattoir at Kilcoy, Queensland.
However, Ms Cui said Chinese authorities were only reluctantly embracing imported foods and providing billions of dollars worth of subsidies to support domestic food producers.
