Opportunities galore in a changing China

The current economic pattern in China is not sustainable, the Chinese Consul-General in Melbourne Liang Shugen told a lunch yesterday. And innovation is a key focus providing opportunities for many of Australian entrepreneurs and innovators, he says.

Challenges

Speaking at the Leaders of Innovation function, Liang outlined the challenges ahead for China and opportunities for Australian entrepreneurs.

The first major challenge is the division between city and country. Shanghai’s per capita GDP is 10 times that of Guizhou. In Beijing the average income of urban residents is twice that of its rural residents, Liang says.

Pressure on employment and social security is mounting. “Every year 10 million new jobs need to be created. And a social security net covering the country’s population is critical,” he says.

He says the processing trade accounts for half of China’s total exports. “It is low in profit and high in resource consumption. Many of its exports are low in technology and weak in brand competitiveness.”

China’s ability to cope with natural disasters is very weak. “The snow storm that swept southern China before the Chinese New Year caused 129 deaths and direct economic loss of more than $US20 billion.

Opportunities

Liang says the focus of the country’s leaders will be on solving many problems through innovation.

The latest Communist party congress called for a scientific approach on development. “Emphasis is laid on innovation and the increase in the contribution of scientific and technological advancement to economic growth, promoting international cooperation in science, and technology, managerial skills and talent,” he says.

The focus is on adopting new technologies for conserving energy and reducing emissions and on addressing climate change.

He says China plans to spend $50 billion in water recycling in the next five years, providing many opportunities for Australians. “According to the 11th Five Year Plan, one thousand new waste water processing plants will be built in this period,” he says.

He also notes that Victoria is very strong in banking and other services sectors and could meet China’s demand to reform its banking system and improve the service trade.

Liang says he concurs with the view that while Beijing represents the China of today, Chongqing represents China’s tomorrow. “It is the biggest city in the world with a population of 32 million people covering an area of 82 thousand square kilometres equal to that of Austria.”

He says the Chinese have set up a strategy to develop the mid west. “An increasing number of foreign investors are looking to cities like Chongqing, Chengdu, Wuhan, Kunming, Nanning and Xi’an to explore new business opportunities.

He also added that many people believe that China relies on the import of resources and energy. In fact China is rich in minerals with large reserves of copper, lead, zinc, nickel, gold, silver, rare earth and many more, especially in the west.

“Australia’s technology in mining and mining safety can find opportunities,” he says.

Then there are seven major new airports to be built in the west with more new ones in smaller cities, 15 new railway lines planned and many highways and bridges.

He adds that mid-west China has great potential for renewable energies and the development and use of that energy will be a dominant theme in the years ahead.

China is Australia’s biggest trading partner and Australia is China’s ninth largest trader, he says. “Two way merchandise trade has been growing at more than 20% annually for the past decade.”

Responding to a question about China poster boy Prime Minister Kevin Rudd, Liang says it was also the efforts made by his predecessor John Howard that has resulted in the strong relationship with China.

He also says a Free Trade Agreement is needed and welcomed the 11th round of negotiations to be held soon in Beijing.