Changing consumption patterns in China will make overreliance on Beijing a disadvantage in the years ahead, according to Maplecroft's China Rebalancing Index.
However, a number of industrialized economies which tend to export services and high-end consumer goods are on course to benefit substantially from growing middle class consumption in China.
The Index is an assessment of which countries stand to gain and lose from the rebalancing of China’s economy from an investment and net trade growth model towards expansion driven by consumption.
The index demonstrates how a number of countries which have benefited immensely from rising mineral prices caused by a recent Chinese construction boom stand to lose out from Beijing’s decreased reliance on investment for economic growth.
Conversely, service-based economies and manufacturers of consumer goods are likely to benefit from the economic pivot.
A number of African nations such as Liberia, Zimbabwe and DR Congo have benefited from a surge in Chinese investment in recent years. Having struggled to attract Western investment due to a combination of economic, political and reputational challenges, these have become economically reliant on Chinese capital.
Zimbabwe has seen strong economic growth in recent years because Chinese demand for nickel, diamond and gold has more than filled the void created by Western economic sanctions with trade volumes between the two nations reaching over US$ 1 billion per year.
As demand for Chinese demand for these hard commodities is expected to wane in the years ahead, Zimbabwe will need to find alternative buyers for its exports if it is to avoid a hard landing.
Australia, Mongolia and Chile all weathered the global financial crisis particularly well thanks to Chinese mineral demand and are also among the worst performing countries in the China Rebalancing Index.
The effects of Chinese rebalancing have already begun to manifest themselves in these economies through slowing growth and rising unemployment.
On the other end of the spectrum, a number of industrialized economies which tend to export services and high-end consumer goods are on course to benefit substantially from growing middle class consumption in China.
As a result, Japan, Germany, Belgium, the United Kingdom, the United States and Canada all feature among the twenty best performing countries in the China Rebalancing Index.
The gains from rebalancing are expected to be very sizeable in these economies over the next few years. For instance, the UK Foreign and Commonwealth Office estimates that exports to China in the financial services sector will grow more than nine fold by 2020 if China successfully rebalances its economy.