11 Apr 2012
China Inflation Syndrome
How does China’s slip into an inflationary cycle affect Australia?
Over the last 6 months China's forward expectations of growth have reduced, wage increases have jumped to double digit growth, the manufacturing sector has become sluggish and export/consumer demand has softened. China is a major consumer of Australian minerals, goods and services. As China falters, so does Australia.
Australian businesses with exposure to the Chinese economy must take note of the long term effects of inflation and decreased business activity within China and the resulting drop in demand.
Although the Chinese Government will seek to rein in inflation, it also has to balance falling growth - which it has historically stimulated. On top of all of this, there is significant Government transition rolling out increasing the uncertainty of China's performance over the next 12 months.
There are opportunities for Australian Manufacturers and Service providers in this turbulent time. Our opportunities rest with clever and innovative products and service provision. As China seeks to do what it does best to recover its growth and financial stability - Australian business should be ready to pounce on opportunities.
