BHP’s estimates of the Chinese economy at “the very upper end” of economists’ projections
BHP chief executive Mike Henry and Fortescue Metals executive chairman Andrew Forrest have strongly backed the Chinese economy to recover this year.
BHP chief executive Mike Henry and Fortescue Metals executive chairman Andrew Forrest have strongly backed the Chinese economy to recover this year as Beijing chases its goal of “around” 5 per cent growth this year.
Mr Henry said BHP’s estimates of the Chinese economy were at “the very upper end” of economists’ projections, noting it could see “green shoots” in housing as policies to stabilise the property sector were starting to work.
“We remain quite optimistic about the pick-up of the Chinese economy in the course of the year,” he said.
He said when Chinese officials set targets for economic growth they usually delivered them.
“You can be pretty sure the targets set in China are targets they are confident in meeting,” the BHP chief told a business conference on Tuesday.
But he warned that China’s demand for steel was moving towards a peak, which would be a challenge for the Australian economy.
“As the Chinese economy matures, steel demands peaks and begins to decline. The iron ore market is going to come under a bit of pressure,” he said.
Mr Forrest said China’s official economic forecast of 5 per cent growth “accords with my own experience and discussions”.
He said the Chinese people were pleased to come out of their extended lockdowns and to resume spending, and Chinese businesses were keen to get on with investment projects.
“The Chinese steel mills are seeing a rise in demand,” he said. “I think that 5 per cent is realistic and will be achieved.”
Asked about Queensland’s move to increase resource taxes, Mr Henry said any further disincentives to investment in Australia were “not going to serve the national interest in the longer term”.
He warned the “tide is changing for many of the fundamental trends that Australia’s current prosperity has been built upon”.
He said trends such as decarbonisation, deglobalisation, fragmenting supply chains and flattening Chinese steel and iron ore would challenge the Australian economy.
“These are big changes but unlike some of those that Australia has successfully navigated and benefited from in recent decades,without the right responses, these changes will not be our friend.”
He said it was important that Australia took steps to bolster its competitiveness if it was to “secure continued success and prosperity”.
“This is going to take a higher level of ambition, a greater degree of focus, and a greater commitment to business and government working together than may have been required in our recent past,” he said.
“The race is on.”
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