Australia's exports to China could double to $250 billion in just 15 years as the Asian giant's middle class begins to spend up big.
Despite growing concern about China's slowing economy, which has caused massive swings on global financial markets in recent months, ANZ says major shifts in the world's second largest economy present a massive opportunity for Australian businesses.
An extra 300 million new middle class consumers will populate China's urban areas by 2030, shifting the nation's demand from heavy commodities to services, the bank says in a report titled Sleeping Giant: China's Consumer.
This massive middle class is expected to more than double spending, and lift China's consumption to nearly 50 per cent of its gross domestic product, up from 38 per cent in 2014.
That would take China's consumption above the current economic output of the US.
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ANZ said urban disposable income per capita in China will reach around $A46,000, up from $A11,000 in 2014.
This will open up new export opportunities for Australia, particularly in tourism, education, financial services and healthcare, ANZ chief economist Warren Hogan said.
Agricultural exports are also expected to grow strongly, driven by China's urbanisation and improving living standards and Australia's reputation for producing high quality, safe food.
"Australia needs to adapt to China's new growth model by moving towards service exports, as well as opportunities in agriculture and manufacturing," Mr Hogan said.
ANZ's report also warns that the rebalancing of China's economy will diminish demand for Australia's natural resources.
Economic changes will also require reforms to increase China's household income and precautionary savings, including initiatives to widen medical insurance, reform pensions and amend labour laws.
