Post coronavirus how will China's economy impact Australia: GiFang's Michael Yang

Post coronavirus how will China's economy impact Australia: GiFang's Michael Yang
Post coronavirus how will China's economy impact Australia: GiFang's Michael Yang

EXPERT OBSERVER

To date, the USA has close to 100 deaths due to coronavirus, Italy has more than 1,100, Iran has more than 600, Korea has more than 70 deaths. Australia now has 3.

Meanwhile, China is reported to have contained the coronavirus, achieving what many public health experts thought was impossible: containing the spread of a widely circulating respiratory virus.

Having spent my time in China for a month early this year and seeing it with my own eyes, I think China has rolled out the most ambitious and extreme disease containment effort in history.

Perhaps the most dramatic effort was the lockdown of Wuhan city and nearly the entire Hubei province, effectively putting at least 50 million people under a mandatory quarantine since 23rd Jan. This prevented further exportation of infected individuals to the rest of the country/world. In other regions of China, people voluntarily quarantined themselves and were monitored by appointed leaders in the neighbourhood.

In February, Chinese authorities also built two dedicated hospitals in Wuhan in 10 days. Health care workers from all over China were sent to Wuhan, where more than 1,800 medical teams traced tens of thousands of contacts of confirmed cases.

Sports events were cancelled, cinemas were shut, schools and universities extended breaks, businesses closed down, people stayed at home and when they had to go outdoors (to do shopping etc) everyone had to wear a mask.

In contrast, despite the stimulus package, Scott Morrison has been encouraging people to keep attending mass gatherings as coronavirus continues to spread in Australia... until Peter Dutton gets it.

China has moved on. Close to 70,000 people were treated and recovered. Many of the hospital beds are now empty. China is eyeing "new infrastructure" projects to offset the economic impact of the coronavirus, and boost sustainable growth, e.g. accelerate the construction of new infrastructure such as 5G networks and data centres.

Instead of simply turning to the old playbook of investment stimulus, it is widely believed that China should promote a new round of infrastructure construction through reform and innovation.

Investors have already jumped on the bandwagon. In China's A-share market, stocks related to 5G networks, industrial internet, inter-city transit systems, vehicle charging stations and data centers -- all considered as new infrastructure -- saw continued fund inflows, with exchange-traded funds linked to these shares registering gains in the past weeks.

While policy incentives have guided market funds into the sector, the Chinese government is also expected to encourage new infrastructure via special bonds, public-private partnerships and credit support. About 714.8 billion CNY ($152.7 billion AUD) of special-purpose bonds were issued in January, 10 times the amount of general bonds issued.

So how is this going to impact the Australian economy?

Well, China is Australia's biggest trading partner mainly due to China's strong demand for iron ore, coal and liquefied natural gas. Many major Australian mining companies rely heavily on China. Australia's GDP growth could be reduced by 50% in a worst case scenario of China reducing its demand for Australia's exports.

Simply put, if China's economy crashes then Australia will be hit hard.

With China's new round of infrastructure construction, Australia will be one of the major beneficiaries, economy-wise. This could mean a contribution of $200 billion worth of imports and exports to the Australian economy, just like 2017-18.

Industry sectors such as education and tourism might still continue to suffer because of flight restrictions. However, flights might not be needed for cross-border property purchases. There might be a drop-off in open for inspection and auction attendance, but Chinese buyers do not have to come to Australia to purchase properties.

In my Chinese social media WeChat, I can see at least 20 people (buyers, that is) showing off their property purchases in Australia, while they are physically in China. They included private sales, off-the-plan or nominee sales, and "remote auction" - asking their friends/family to attend auctions on their behalf.

This trend will probably continue in the months to come. At GiFang, we will be sending further messages to our 200,000+ Chinese subscribers that if they require 'buyer assistance', we can act as an intermediary between them (no matter where they are) and the Australian agents, on properties listed on GiFang.com.

Michael Yang 杨霄羽 is the CEO of GiFang.

Tags: 
Economy China

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