South Australia's China Strategy

South Australia’s China StrategySean Keenihan, 15 June 20120

Core Messages• The world order is shifting – Australia and SA is positionedexceptionally well if we wake up• Compelling story in China - must embrace it or miss it• China’s growth is accelerating the restructuring of business inAustralia – time to wake up• To prosper SA Businesses need to engage effectively withChina1

China’s Urbanisation –The near future• Shift from export and investment led growth to domesticconsumption model - fundamental change• At least 10 million per year from rural to urban areas overthe next 20-30 years.• 36 million affordable homes – world’s largest housinginvestment program• By 2020, Chinese consumers will amount to 22% of totalglobal consumption3

What to expect• Changing growth model will ensure continued growth• Urbanisation, middle class growth and policy flexibility willcounter export drag• Cyclical bumps yes – but long term drivers all good• Current easing is deliberate – market struggling to interpretwhat is happening5

How is our future linkedto China• Australia’s economic prosperity is linked to China’s economicgrowth• In 2011, the relationship was worth $13,470 to everyAustralian household. In 2010 it was $10,500 per household• China’s and Australia’s economies are highly complementary– Australia has what China needs to fuel and sustain itscontinuing growth. Same goes for SA.6

How is our future linkedto China ... (cont)• China represents a growing high – value market for our highcost goods and services• Commodities export obscures the picture• Need to focus now on opportunities high quality, high valuegoods and services• We’re not the only ones with this focus...• Prosperity for some – survival for others7

Time to change direction...• Existing/traditional markets demand down• High $AUD• High cost of production• Competitor markets restructuring to compete• Productivity improving elsewhere relative to Australia8

SA’s future linked to China• China is SA’s largest two way trading partner – nearly onequarter of SA’s exports were to China• SA’s future prosperity is hitched to China’s• To prosper we need to engage effectively with China• Most businesses in SA are ill-prepared to engage effectivelywith China• We need a strategy – and an effective strategy for businesssuccessin China requires close collaboration betweengovernment and industry9

SA’s China Strategy• ACBC SA working with the SA Government to:o grasp emerging business opportunities for high quality,high value SA goods and services to China’s fast growingmiddle classeso target strategic Chinese investment in infrastructure thatwill unlock the vast potential of our resources andagricultural sectors• The SA China Strategy will:o broaden the economic relationship with Chinao set directions to maximise opportunities for all sectors ofthe SA economy10

SA’s China StrategyKey sectors of focus are:• Mineral resources and energy• Agriculture seafood and wine• Education• Tourism• Advances manufacturing• Clean tech• Services11

China Strategy Process• Directions paper is a conversation starter• Visit www.dmitre.sa.gov.au/China• Industry specific round tables and events featuring governmentand industry speakers provide background narrative and tostimulate discussion• Fourth quarter 2012 for launch of the SA China Strategy12

• Directions paper is a conversation starter• Visit www.dmitre.sa.gov.au/China• Fourth quarter 2012 for launch of the SA China Strategy13

Take home messages• The China story is real• It is driving transformation in the Australian economy and inbusiness• Time to accept the change in our world paradigm• South Australia is well positioned – its now all about strategyand execution14