With Beijing attempting to ease large capital outflows from its economy, thought to be adversely affecting their currency, the Australian Minister for Trade, the Hon Steven Ciobo MP, believes our property sector many be an unwitting victim, as foreign investment dries up from our northern neighbours.
The news follows a decision by the State Council of China, the effective Cabinet of the Chinese Government, which issued the first set of rules on overseas investment by Chinese companies last week. The new banned list, which includes defence technology, also categorises overseas property development and hotel investment as “restricted”.
China’s National Development and Reform Commission declared that the property sector was “not the real economy” and companies investing overseas in real estate could be harming China’s financial stability by increasing capital outflows.
Hosting the Australian Tourism Ministers’ Meeting in Beijing today as part of the China-Australia Year of Tourism https://t.co/xL8M2ioUND
— Steven Ciobo (@StevenCiobo) August 28, 2017
Keen to spruik a diversified Australian economy, the Minister was at pains to avoid any references to a two-speed economy, saying “yes, China is a player in this space, but what will ensure the Australian economy deals with this well is the fact we have a very diversified investment base, which means, as the old saying goes, we don’t put all our eggs in one basket.”
The Commission has labelled the overseas buying spree by China’s biggest private companies in recent years as “irrational”.
Analysis by Knight Frank shows Chinese companies bought 38 per cent of all the residential property development sites sold in Australia last year, totalling $2.4b.
Companies that violate the foreign investment rules would be punished, the State Council statement said.
In positive news for other Australian sectors?—?agriculture and fisheries investment was given the green light, as was joint investment with foreign companies in technology and advanced manufacturing.
