China’s annual GDP growth has dropped from 10 percent a decade ago to 6.6 percent last year. And while the slowdown may not be all doom and gloom like headlines would suggest, it will nonetheless have major implications for Australia’s economy given China is our largest trading partner.

“Australia is more exposed to a downturn in Chinese economic growth than most nations,” IBIS World senior industry analyst Jason Aravanis said.

IBIS World predicts these four Australian industries will be hit hardest by an economic slowdown in China:

Mining

Within the mining sector, IBIS World forecasts iron ore mining and black coal mining to be most at risk if there’s a downturn in Chinese demand.

In this sector, 80 percent of the estimated $64.1 billion in revenue in 2018-19 will be generated through exports to China.

The black coal mining industry is expected to generate $52.1 billion in revenue, around a third of which comes from exports to China.

“Chinese demand for black coal is projected to decline over the next five years as steel production contracts in line with slowing economic growth,” Aravanis said.

A downturn also means that new projects under consideration by major miners like Rio Tinto and BHP will also come under threat.

Education

It’s no secret that Australia’s university education industry enjoys high demand from international students, particularly from China.

In fact, Chinese enrolments at Australian universities have increased by at least a staggering 12 percent each year since 2002, and in 2017-18 contributed $32.4 billion to the education sector, according to Aravanis.

“A downturn in China’s economic growth could lead to a sharp decline in household incomes and stricter capital controls to curb the flow of money out of the country,” he said.

“These trends could cause Chinese students to opt for domestic education rather than studying abroad.”

Tourism & Retail

Chinese visitors make up the biggest slice of the international visitor pie, representing 1.43 million visits among 9.2 million international visitors.

They like to spend, too, much to the delight of several luxury retailers in the clothing, footwear and watch and jewellery retailing industries; Chinese tourists spent $11.5 billion on Australian goods and services in the year up to September 2018.

So if the Chinese economy slows down, we’ll likely see less Chinese tourists bringing their business to Australia.

“This trend will likely threaten a range of industries linked to the tourism sector, such as the international airlines industry,” Aravanis said.

Opportunities for Australia

Although Australia might see less business from Chinese students, tourists or businessmen due to the slowdown, there are other initiatives China is working on that may soften the blow.

Speaking to Yahoo Finance, Deloitte Access Economics senior partner Pradeep Phillip earmarked infrastructure, climate change and tech/AI as areas to watch in 2019.

“The Chinese government is investing heavily in infrastructure both within China and globally through its Belt and Road Initiative. This is good news for Australian miners and services sector, if sustained,” he said.

But he added that how China deals with its slowing economy will be key.

China is also in the midst of transitioning to a lower-carbon economy and this will mean greater demand for alternative energy.

“This is great news for the Australian resources sector over the medium term, especially our liquefied natural gas exporters,” Phillip said.

“Innovation on adapting to climate change in China can also be beneficial for Australians in their appropriate adoption in our homes and industries.”

Lastly, while China’s treatment of intellectual property and innovation is a current source of contention (and, indeed, at the heart of the US-China trade war), there are opportunities for the Australian tech sector amidst this.

“The reality is that China is racing hard to build its tech sector and use of AI which can present enormous opportunities for Australian entrepreneurs and industry,” Phillip said.

“As an example, China’s ambitions for its space industry can present opportunities for collaboration and business with Australia.”