Don’t blame Chinese buyers for Australia’s real estate boom
Last week I argued that blaming Chinese money for the worsening real estate affordability in Australia was off the mark (The property bubble myth that refuses to die, 14 October 2014).
Caution on the East China Sea
As Australia’s Foreign Minister I had quoted several times an acute observation by Lee Kuan Yew. It was on the question of the future character of China. He said:
“Peace and security in the Asia-Pacific will turn on whether China emerges as a xenophobic, chauvinistic force, bitter and hostile to the West because it tried to slow down or abort its development, or whether it is educated and involved in the ways of the world – more cosmopolitan, more internationalised and outward looking."
Zombie economics: the notion China is to blame for Australia’s property bubble refuses to die
Despite valiant efforts by commentators such as Bernard Keane and Michael Pascoe to slay claims that Chinese buyers are making it harder for ordinary Australians to enter the housing market, the
notion refuses to die. It is the “zombie idea” afflicting the Australia-China economic relationship.
And there is a danger the zombies will multiply. Last week the Australian Financial Review reported that China recently eased restrictions on outbound investment. The implication being “a fresh wave of capital [is] expected to make its way into the Australian property market”.
Weighing the risks for Australia as China rebalances
China’s leaders have been vocal in their support of a new growth model, one where consumption leads the way. Economic commentators fret about what this means for Australia.
One view is that economic pain lies ahead. As the rate of resources and energy-hungry investment in China falls, commodities such as iron ore and coal will not fetch anything like the prices they did a few years ago. Investment in the natural resources sector will dry up.
China’s workers must spend if economy is to gain steam
Ifs crunch time for China's economy. The country's long-term health requires a new model where growth is driven by consumption. The next few months should tell us whether China's leaders are able to pull it off.
Last week, we saw a snapshot of where growth driven by investment eventually leads. Overcapacity in the property sector has resulted in home prices falling in most cities for three straight months.
China trade to go beyond the boom
Japan has a population of 128 million, China 1.4 billion. Japan’s economy is already mature. China only entered the ranks of upper middle-income countries in 2011, and the World Bank expects that the transition to a mature, high-income economy will take at least another 15 to 20 years.