Why China's slowdown isn't as bad as it looks for ASX 200 mining shares

Should investors worry about how China's wobbling economy could impact the ASX miners?

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points
  • China is seen as a major buyer of Australian commodities
  • The Chinese economy's growth is slowing, but one expert isn't worried
  • Wealth manager Ken Fisher outlines why Australia should be okay, including exports rising to other countries

S&P/ASX 200 Index (ASX: XJO) mining shares are under the spotlight as China goes through a bumpy ride.

As Reuters reported today:

China's 'zero-COVID' policy – including stringent lockdowns, travel restrictions and mass testing – has taken a heavy toll on the country's economy. The government's crackdown on big technology companies has also had an outsized effect on the young workforce.

Unemployment among people aged 16 to 24 stands at almost 19%, after hitting a record 20% in July, according to government data. Some young people have been forced to take pay cuts… Almost 60% of people are now inclined to save more, rather than consume or invest more, according to the most recent quarterly survey by the People's Bank of China (PBOC), China's central bank. That figure was 45% three years ago.

Workers at the port joyfully jump high in the air with shipping containers in the background.

Image source: Getty Images

Why ASX 200 mining shares could be okay

Wealth manager Ken Fisher writes in The Australian that some market commentators are suggesting Australia could suffer because China buys so much of Australia's resources. That demand could reduce if China's economy grows at a slower price.

He did acknowledge that 40% of exports went to China in 2021. Compared to 27% in 2011 and 6% in 2001.

But there's a question worth asking. How come Australian exports to China are down 11.3%, yet Australian exports are up 30.3%?

The answer is that exports to Japan, Europe and India have all more than doubled. Exports to South Korea are up 64.7%. Natural gas is one factor that can help Australia, with energy demand rising. Metals that help electrification can also "support metal prices and expand export markets".

His main point is that "Australia simply isn't China-reliant".

But, even with all the uncertainty and volatility, he notes that headlines are focused on recession fears, yet "very little suggests a deep downturn". This could be positive news for ASX 200 mining shares.

Manufacturing indicators suggest growth for both the world as a whole and Australia. The manufacturing new orders index reportedly expanded as well, which Fisher said was "great news, given today's orders are tomorrow's production".

Optimistic outlook

In concluding his thoughts about China, Fisher writes:

Inflated China fears have stalked Australian stocks for years. But remember: False fears are bullish, always and everywhere. So is depressed sentiment. Don't let today's gloomy headlines scare you from the coming recovery.

ASX 200 mining share snapshot

At the time of writing, the Fortescue Metals Group Limited (ASX: FMG) share price is up 0.99% today, the BHP Group Ltd (ASX: BHP) share price is up 0.63% and the Rio Tinto Limited (ASX: RIO) share price is up 0.89%.

Motley Fool contributor Tristan Harrison has positions in Fortescue Metals Group Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Resources Shares

An investor looks happy holding a finger to his computer screen while holding a coffee cup in a home office scenario.
Resources Shares

Alcoa posts Q1 2026 result

Alcoa Q1 2026 results show higher profits and a positive outlook, led by strong aluminium pricing and operational progress.

Read more »

Smiling miner.
Resources Shares

Can BHP shares smash through the $60 record barrier in April?

The miner needs strong commodities, steady growth, and China demand to hit new highs.

Read more »

Miner holding a silver nugget.
Resources Shares

Up 82% in 12 months, ASX All Ords silver share jumping today on big US news

The ASX miner is targeting high-grade silver deposits in California.

Read more »

Two mining workers on a laptop at a mine site.
Resources Shares

This ASX critical minerals company says its mining project could be the world's largest

This project in Malawi could be a game changer in the critical minerals space.

Read more »

Two young African mine workers wearing protective wear are discussing coal quality while on site at a coal mine.
Resources Shares

Whitehaven Coal announces US$900m notes issue and debt refinancing

Whitehaven Coal issued US$900 million in new notes to refinance debt, aiming for lower interest costs and a longer repayment…

Read more »

A businessman looking at his digital tablet or strategy planning in hotel conference lobby. He is happy at achieving financial goals.
Resources Shares

PLS Group prices US$600m in senior notes for growth and refinancing

PLS Group announced a US$600m notes issue to fund debt refinancing and general purposes, boosting flexibility for its lithium operations.

Read more »

gold, gold miner, gold discovery, gold nugget, gold price,
Resources Shares

Genesis Minerals posts March 2026 quarterly results

Genesis Minerals’ March 2026 quarter saw cash surge to $600 million, strong gold output, and key growth projects advancing.

Read more »

A man smiles as he holds bank notes in front of a laptop.
Resources Shares

New Hope launches $300m convertible notes offer and buyback

New Hope is refinancing $300m of convertible notes, targeting lower costs and extended debt maturity through a new offering.

Read more »