1. The Rise of China
A report on why Australian tourism operators should
consider becoming “China Ready”
Prepared by
This is an Australian Government funded
initiative under T-QUAL Grants
welcomingchinesevisitors.com

2. “
This brief report will provide an introduction to the
expansion of China’s growing economy. Compared to
traditional markets such as Europe, China is experiencing Many international
a higher rate of economic growth leading to rapid
urbanisation and a rising middle class who are becoming
travellers currently reside
increasingly interested in overseas travel. It is also in Tier 1 cities, however,
important to be aware of China’s tiered city system. Many
international travellers currently reside in Tier 1 cities,
however, many other cities are experiencing growth
which means there is great potential for future travel.
After reading this report, you will be aware of China’s
many other cities are
experiencing growth which
means there is great
“
rapid economic growth and the opportunity this presents
for the Australian tourism industry.
potential for future travel.
Table of
Contents
Urbanisation in China 4
GDP 4
Europe and China: A Comparison 5
Europe and China Geographical Comparison 6
Urbanisation in China and Europe 7
Wealth & Consumption in China 8
Rapidly Rising Incomes 8
High Net Worth Individuals 8
China’s Tiered City System 9
References 10
Rise of China Report Prepared by AVANA 2

3. Recent Economic Indicators 07 08 09 10 11(a) 12(b)
GDP (US$bn) 3494.2 4520.0 4990.5 5930.4 7298.1 7991.7
GDP PPP (US$bn) 7329.9 8214.4 9065.9 10128.3 11300.0 123870
GDP Per capital (US$) 2645 3404 3739 4421 5414 5899
GDP Per Capita PPP (US$) 5548 6185 5792 75550 8382 9143
Real GDP Growth (% Change yoy) 14.2 9.6 9.2 10.4 9.2 8.0
Current Account balance (US$m) 353900 412400 261000 305300 201000 181719
Current account balance (%GDP) 10.1 9.1 5.2 5.1 2.8 2.3
Goods & Services Exports (%GDP) 38.4 35.0 26.7 29.6 29.4 27.7
Inflation (% Change yoy) 4.8 5.9 -0.7 3.3 5.4 3.3
(a) All recent data subject to revision (b) IMF/EIU estimate
Source: Department of Foreign Affairs and Trade
The Rise
of China $8,569
China has experienced rapid economic growth over
the past two decades, and forecasts suggest that the $5,171
purchasing power of Chinese consumers will continue
$3,066
to surge.
$2,567
ƒƒ China’s GDP has risen at unprecedented levels $1,677
$1,362
ƒƒ Higher middle class incomes mean more
discretionary spending leading to increased $951
capacity to travel, which is also stimulated by more $781
$698
$613
scheduled holiday periods throughout the year $570
ƒƒ China has over 500,000 high net worth individuals
and Australia is a top luxury travel destination 1957 1962 1970 1975 1980 1985 1990 1995 2000 2005 2010
Real GDP Per Capita (PPP) in US Dollars by the end of each FYP,
1953-2010
Source: The Conference Board Total Economy Database.
Rise of China Report Prepared by AVANA 3

4. Urbanisation in China
300 million 23 20-50k
China will have an Over the next two
Between 2010 and 2025, estimated 23 cities with decades China will build
it is estimated that 300 a population of 5 million 20,000 to 50,000 new
million Chinese now or more by 2025. skyscrapers, or the
living in rural areas will equivalent of TEN New
move into cities York-sized cities.
163
China will have an
1/5
China became the
estimated 163 cities world’s largest
with a population of a construction market in
million or more by 2025. 2010. By 2020, China is
predicted to account for
one-fifth of the global
construction industry
Source: McKinsey & Co. report “Preparing for China’s urban billion”
March 2009
GDP
According to the Department of Foreign Affairs and With this rise in GDP comes a growing middle class that
Trade, China experienced a sustained period of rapid has a huge appetite for products and services that were
economic expansion until a recent slowdown in 2009. previously out of reach. Twenty years ago, this middle
Until this point, the last two decades had averaged class strived for ownership of push bikes, televisions
around 10 per cent GDP growth. McKinsey China and washing machines, these days the middle class is
Insights reports in its 2012 Annual Chinese Consumer striving for a new big three - cars, houses and travel.
Report that consumer spending power will soar, even in
a slower-growing China.
Rise of China Report Prepared by AVANA 4

5. China
Recent Economic Indicators 07 08 09 10 11(a) 12(b)
Real GDP Growth (% Change yoy) 14.2 9.6 9.2 10.4 9.2 8.0
Current Account balance (US$m) 353900 412400 261000 305300 201000 181719
Current account balance (%GDP) 10.1 9.1 5.2 5.1 2.8 2.3
(a) All recent data subject to revision (b) IMF/EIU estimate
European Union
Recent Economic Indicators 07 08 09 10 11(a) 12(b)
Real GDP Growth (% Change yoy) 3.4 0.5 -4.2 2.0 1.6 0.0
Current Account balance (US$m) -66860 -183797 -15877 -24591 17133 51,082
Current account balance (%GDP) -0.4 -1.0 -0.1 -0.2 0.1 0.3
(a) All recent data subject to revision (b) IMF forecast
Source: Department of Foreign Affairs and Trade
Europe and China: A Comparison
To put the exceptional economic growth of China in
perspective, the figures above compare China with a
more traditional tourism trade partner, the European
Union. China’s GDP in 2012 is forecast to grow at a rate of
8%, while the European Union is forecast at 0% growth.
Rise of China Report Prepared by AVANA 5

6. Europe and China Geographical Comparison
9561 sq km 4,331 sq km
China European Union
1348.1 500.6
1,348.1 million 500.6 million
population population
Source: Department of Foreign Affairs and Trade
Rise of China Report Prepared by AVANA 6

7. Urbanisation in China, 1978–2010
50
40
30
20
10
% 1978 1982 1986 1990 1994 1998 2002 2006 2010
Source: China statistical yearbook 2011.
Urbanisation in China and Europe
Based on United Nations (UN) projections, the rate of
urbanisation in China is expected to be:
China Europe
68% 73%
68% by 2040, equivalent by 2050 the rate of
to the urbanisation rate urbanisation for Europe
projected for Japan in will be 73%
2015
It is projected that by 2030, the urban population of Whilst traditional markets still offer the Australia strong
China will reach one billion and by 2025, China will have trade opportunities, this quick comparison of China and
163 cities of over one million residents, compared with Europe highlights China’s growing importance for our
63 cities of that size in Europe. country.
Rise of China Report Prepared by AVANA 7

8. Wealth & Consumption in China
271 1 Million 1/4 500%
There are now 271 China now has 1 million ¼ of the world’s cars are The average income has
billionaires in China millionaires sold in China risen 500% since 2001
($US), up from 130 in
2009.
22% 850 450 20%
million million
China consumes around China has the world’s China has the world’s China is the world’s
22% of the worlds energy largest mobile phone largest Internet second largest consumer
population with over 850 population with over 450 of luxury goods following
million active accounts million Chinese internet Japan, and will account
in 2011 users as of 2010 for about 20 percent ($27
billion) of global luxury
sales in 2015
Source: en.wikipedia.org/wiki/China
www.china-mike.com/facts-about-china/
Rapidly Rising Incomes High Net Worth Individuals
China’s strong economic growth has resulted in rising According to the 2011 China Private Wealth Report by
incomes meaning that the Chinese consumer population China Merchants Bank with Bain & Company, there are
has more discretionary funds available for purchases over 500,000 people with disposable assets of US$1.6
such as travel. On 13 August 2012, the New York Times million (termed high net worth individuals or HNWIs).
reported that affluence is arriving faster than many The report also states that in 2010, 15 provinces/
economists anticipated, and based on annual surveys municipalities each had more than 10,000 HNWIs,
carried out since 2005, a giant leap is forecast by 2020, increasing by four since 2008 with the inclusion of
according to consulting firm McKinsey analysts. Tianjin, Hunan, Hubei and Anhui. More than 50 per cent
of China’s wealthy remain clustered in five provinces:
By 2020, there will be 167 million “mainstream” Guangdong, Shanghai, Beijing, Zhejiang and Jiangsu,
consumer households in China with annual disposable which are all located on the east coast and are generally
income of between $16,000 and $34,000. This is over 10 more developed then other provinces in China.
times the 14 million, or 6 percent, who currently fit that
definition. McKinsey also predicts that there will be 120
million households with $6,000 to $15,999 of spending
power.
Rise of China Report Prepared by AVANA 8

9. Tier 1 Cities
Tier 2 Cities
Tier 1 Tier 2 China’s Tiered City System
Tier 1 Cities - Beijing, Tier 2 Cities - Chengdu, China can be categorised into three tiers of development,
Shanghai and Guangzhou Chongqing, Hangzhou, with the East coast cities being the most developed and
Nanjing, Qingdao, Tianjin, the Western cities being the least. This is important for
Shenyang, Shenzhen, the Australian tourism industry to understand as the
Suzhou, Wuhan, Xiamen vast majority of Chinese visitors are coming from Tier 1
cities, followed by the Tier 2 cities.
Rise of China Report Prepared by AVANA 9

10. References
Department of Foreign Affairs and Trade 2012, China Factsheet, viewed 15 September 2012,
<www.dfat.gov.au/geo/fs/chin.pdf>
Department of Foreign Affairs and Trade 2012, People’s Republic of China country brief, viewed 15 September
2012,
<www.dfat.gov.au/geo/china/china_brief.html>
Department of Foreign Affairs and Trade 2012, European Union Factsheet, viewed 21 September 2012,
<www.dfat.gov.au/geo/fs/eu.pdf>
McKinsey & Company, 2009, Preparing for China’s urban billion, McKinsey Global Institute, viewed September
2012,
<www.mckinsey.com/insights/mgi/research/urbanization/preparing_for_urban_billion_in_china>
The New York Times, Consumer Growth Could Buoy China’s Slowed Economy, August 13, 2012, viewed 26
September 2012,
<www.nytimes.com/2012/08/14/business/global/consumer-growth-could-buoy-chinas-slowed-economy.
html?pagewanted=all&_r=0>
Tourism Australia 2012, China Market Profile 2012, viewed 13 September 2012,
<www.tourism.australia.com/en-au/downloads/MarketProfiles2012_China.pdf>
Tourism Australia 2012, 2020 China Strategic Plan – Progress Report, viewed 13 September 2012,
<www.tourism.australia.com/en-au/downloads/China2020_1YearOn.pdf>
Tourism Western Australia 2012, Our Direction in China 2012-2015, viewed on 20 September 2012,
<www.tourism.wa.gov.au/Publications%20Library/Marketing/Tourism_WA_Our_Direction_in_China_2012-2015.pdf>
Rise of China Report Prepared by AVANA 10

11. Interested in Learning More About China?
A consortium consisting of AVANA, China Ready & To register your interest and find out more about the
Accredited, ATEC, and TAFE NSW - WSI has collaborated program, visit welcomingchinesevisitors.com.
to bring you the Welcoming Chinese Visitors Program
which is funded by the Department of Resources,
Energy and Tourism
This is a training program delivered via face to face
workshops and a highly interactive eLearning course
and includes the following modules: This is an Australian Government funded
initiative under T-QUAL Grants
Product Ready - this will step you through
the process of ensuring that your product
is, first and foremost, export ready
Sales Ready - once you know your
product is ready, getting Sales Ready
is the next important step in working
through the process to engage with China
Service Ready - this step ensures that
you will have the understanding and
awareness to deliver the service and
standards that Chinese consumers will
expect when they visit Australia
Program partners
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