The short answer is no. It will be worse than 2018.
I want to consider myself the most optimistic author about China’s future (in the very long term), but in 2019 it’s a very definite no. It is now well known that the Chinese economy is in deep trouble. How do I know that? Not from any anti-China propaganda. Not from any foreign “Chinese experts”. Just from the Chinese state-controlled media. When the state-run media tells people that we are in a tough time, it means it’s seriously tough.
From an Australian perspective, why would anyone care about the rainy situation in China? Well. Because the world we live in today is so closely connected, the slowing down in China will very quickly translate into an economic downturn in Australia. I’m going to discuss the three most “China-related” industries in Australia and explain the impact in the simplest terms.
Firstly, I talked about the higher education industry for international students from China in my previous article. The situation is going to get worse in 2019. As existing students graduate from Australian universities, the tighten immigration policies will push more of them back to where they came from. They won’t even bother to do the temporary work visa thing. The drop in new enrolment will become more visible when the new semester starts. Furthermore, due to the capital outflow limits imposed by the Chinese government, the spending power of our existing international students will drop significantly. It might be a tough year for the restaurant around the universities too.
Secondly, the real estate prices will drop further – especially off-the-plan high rise buildings. It feels so good to be historically correct, as I have successfully predicted the cause and timing of the downturn in my 2017 book “The New Chinese” on page 133. For people who have not read the book, the cause of the first round of drop was China’s much stricter capital outflow control. For those who have blamed the Chinese for high property prices in Sydney and Melbourne, now you can start blaming the Chinse for the crash of our construction industries. Many developers and builder will go out of business. However, that doesn’t mean that they will lose money. They have already earned the money they wanted to make. It’s those who have invested hugely in real estate in the past few years (with debt) will pay for the cost.
Thirdly, our most crucial mining and Agriculture industry. I don’t think it’s fair to blame the Chinse for this one. I’d blame President Trump and his trade war for this one. You see, the purpose of the trade war is to fix US’s trade deficit with China (at least he claims that’s the reason). To fix the deficit, China will purchase (regardless of the outcome of the trade war) more from the US. Because sell less to the US is not an option for Chinse business. An easy thing to do is to switch some actual purchase from other countries (say, Australia) to the US. For everything produced in Australia, if there’s a similar alternative in the US, we can expect Chinse buyers to switch their shopping cart.
Is that all? Unfortunately, no. I just briefly touch on the economy side of things that might impact Australia. I have not yet started talking about China. When we talk about China within the Chinse community, we now have a pretty good joke like this:
“Let’s positive. Although 2019 is going to be a worse year in the past decade, it might be the best year in the coming decade”.
Why? There’s a wide range of concerns – mostly political. All my followers know that I hate talking about politics, so I must end my article here. However, if you want to hear about the truth of China in 2019, please come to this event where I prepare to share more contents.
Date, Time & Location
Tue. 22 January 2019 6:00 pm – 8:00 pm AEDT
CPA Australia, Level 3, 111 Harrington Street, The Rocks. Sydney NSW.