ACRI Opinion

ANZUS call to arms would fail the pub test

December

In the East China Sea, where five islands are disputed between China and Japan, military aircraft could collide in the crowded skies. A ship could be sunk by accident. Roaming fishing fleets and cruise liners complicate the scenarios.

Monday's report by two academics, Nick Bisley and Brendan Taylor, shows how easily conflict could flare. With the US committed to Japan, would the ANZUS Treaty propel Australia into war? It is a war that few Australians would think was in our interests.

Australian manufacturing must refocus on knowledge-based goods and not blame China for industry woes

December

With "Made in China" labels everywhere, the villain in the decline of Australian manufacturing appears easy to spot. But a closer look reveals that Chinese imports have been responsible for little of manufacturing's woes. Moreover, China is shaping up as a source of salvation in the future, and not in the way we may imagine.

Earlier this year, research by Professor Jeff Borland showed manufacturing employment in Australia has declined by about 400,000 since the early 1970s. Meanwhile China has emerged as a "factory to the world". Connecting the dots is close to irresistible.

Look to China’s productivity gains, not headline growth figures

December

China’s economy grew by 7.3% during the third quarter of 2014, meeting market expectations.

Polling by Reuters and the Wall Street Journal put the consensus forecast at 7.2-7.3%, the slowest pace in more than five years.

But to see where China is really headed, a closer look needs to be taken at its productivity.

Don’t blame Chinese buyers for Australia’s real estate boom

December

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

December

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

December

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

December

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

December

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

December

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.