If you missed the show – then firstly, shame. Secondly, click the link: Hans hosts a panel!
This blog post is some kind of homage to a first for me in radio – co-hosting a show. It’s also an homage to something that happens to our show chronically week in, week out – live to air bloopers. And let me guarantee you – that’s not me doing the technical work. Just me doing the hosting with a microphone in hand.
(That’s not to say that my technical work wouldn’t involve bloopers…it’d probably be far worse, but that’s another story for another time.)
Now, some background on this unique and special episode.
The show was entirely dedicated to the Australia-China Investment relationship. From iron ore to our baby formula, Chinese investors want it all. And while we’re all cranky (at least in this country, anyway) about why and how our properties just seem to disappear into thin air, the Chinese are some of the most clever businesspeople in the world. To prove it, Chinese investment in 2016 reached a record level in this country – and now, Australia sits only second to the US in total Chinese exports and foreign investment.
The strategy of the Chinese investor – both private and state – to invest heavily overseas is known as the “going out” policy. You’ll be relieved that the policy’s name has no second meanings in relationship to this other show:
As Rod mentioned, the highlights are plentiful. Thursday’s show was dedicated to helping our listeners understand how the investment trend is happening and where you can make the most out of it. Because we all want some extra money, right?
Now to some thoughts from the co-moderator of the panel – yours truly. I do think that the panel was excellent – but with a caveat, we didn’t get enough time to find out from our panellists about how you can use the trend to make you money.
And for that, I’m:
Firstly, an excellent point that all our panellists referred to all throughout the show – the Chinese will find anything and everything to get their money into. As Professor Hendrischke mentioned, there’s plenty of investment in the new ‘everyday economy’. From hotel investment (the major one being the W Hotel precinct in Sydney’s Darling Harbour) to other commercial projects, investors are looking for all sorts of reasons to keep coming back.
They love Australia enough that one investment (successful or not) does not deter them. In fact, the Foreign Investment Review Board noted that China has $32bn in approved real estate investments in Australia.
Pocket change, right? Not when you compare it to the US – who has 1/4 of that figure.
The infrastructure investment is mostly linked to the Chinese tourist boom and to office interest. An op-ed in The Conversation on real estate finds that the investors know that there has been strong house price appreciation since 2003 – and they have hunches about its continuation. That can be due in some part to the RBA’s very consistent interest rate holding tendencies and could also be in part due to struggling world economic growth.
Secondly, an excellent point brought up – but I’m not sure that it was answered as well as I hoped it would be. Yes – the Chinese are our biggest trading partner – and that’s why we’re in a real clef stick.
I am of course referring to the classic love triangle of 21st century Economics – Australia, China and the US. Australia does have major trade relationships with the US – in 2015, the US and Australia traded over $1.45trn alone. And tourism is a massive two way street – the Americans love our beaches and well, we love Hollywood and their Empire State Building.
However – Australia is really in some kind of limbo because of this. Australia trades heavily between these two nations (China and the US) – BUT their security and political relationships are very clearly not the same. The Chinese are a Communist nation – and are the only friends of North Korea.
(Well at least they used to be – UN Decision on North Korea – August 2017)
But the US is a democratic nation – led by you-know-who. Mr Trump has shown varying interests and varying policy stances on almost everything. One thing he has stuck by is economic protectionism and reminding us all that we share material interests.
And while China is a stable source for commodities and tourism injection, the US has military and political similarities that are irrevocable and etched into our history. So be warned – Australia has a very difficult decision and it’s going to come down to a simple one-liner:
Economic priorities or military priorities?
And frankly, while we have all these same-sex marriage debates on and even the major university funding debates, Canberra is trying to defer and diffuse the real elephant in the room. My opinion? Stop deferring this question – if you want to affect real history and real futures, answer this question with policy and guts.
Finally, it’s worth mentioning that China has something very important over their heads when it comes to foreign investment. The Belt and Road Initiative is – as Professor Hendrischke put it – the way that China will further globalise itself in coming years. It’s what others might call, the great supply chain experiment. And for Australians – it’ll be the first time in a long while that Darwin gets some economic importance.
Infrastructure and power is a new commodity in the globalised world. As for whether we feel “special”, I think that is up to the various governments and their points of view on political economy. If you asked Donald Trump, he would not hesitate to tell you that America is not just special – it’s more like “America only” in the trade sphere. To his credit, more than a million jobs have been added since he came to office – but it’s not come without nearly losing some serious friends overseas. If you asked Malcolm Turnbull (or as some voters might call him, Mr Indecision), he may say otherwise and point to our trade relationships with both China and the US.
There are opportunities no doubt – but we have to be ready to face them head on and meet the risks of it all.
My thanks as always go to our all star panel that joined us on Thursday night. The trade relationship between Australia and China is easy to see – and easy to find the benefits of at the macro level. But at the micro level, it was nice to see them relate it back to Australian cities and how consumers can feel about it all.
I’ll catch you next time.