Your ABC can’t wait to sell you to China

Come on, ABC, lift your game:

He-Ling Shi, an associate professor of economics at Monash University, said while some goods could be sold in other markets, industries like international education would have a harder time shifting towards countries other than China.

“In the long run, Australia can find alternative sources to export our education services, especially to some emerging economies like India or Indonesia or Malaysia,” Dr Shi said.

“But in the short run, frankly, it’s quite difficult to replace the large scale of Chinese students with some alternative sources.”

And while some consumer goods could be shifted to other markets, the mining sector is heavily reliant on the Chinese market.

“Australia can export wine to different regions, different economies like Taiwan and Japan — [but] if you think about iron ore, that’d be big trouble,” Dr Shi said.

Except that China is more dependent on iron ore than we are so it isn’t going to happen. Students will be harder. So, what does the ABC do? Finds the loudest tertiary sector rent-seeker it can in the form of UTS and staff from a “think tank” funded into being by CCP-aligned and disgraced influence cash:

James Laurenceson, director of the Australia-China Relations Institute at the University of Technology Sydney, said the hopes that are being placed in alternative markets “may be a bit misplaced”.

“China’s [GDP is] expected to grow by 1.9 per cent, the US is going backwards 4.3 per cent, the Euro area backwards by 8.3 per cent, India — the great hope of replacing China — going backwards by 10.3 per cent, even ASEAN’s down by 3.4 per cent,” he said.

“Australian businesses, let alone Canberra, don’t get to choose where global purchasing power comes from. This year’s been a classic example of that.”

Dr Laurenceson said even though Australia’s political tensions with China had spiked in 2020, it had still sold more exports to China as a proportion of its total than ever before.

“In the first nine months of this year 40.5 per cent of our total goods exports went to China, that’s up from 38 per cent last year,” he said, adding that the costs involved in moving to new markets were also a concern.

As trade and political tensions simmer, speculation swirls about what’s really going on between the two nations — and what’s next on a Chinese sanctions “hit list”.

“It’s not just about finding someone who likes Australian wine in Vietnam, you’ve got to build brand awareness, you’ve got to build distribution networks and so on.”

Yes, it will cost a few dollars and take some time to backfill Chinese demand. But if student numbers fall enough to do macroeconomic damage then the AUD will also fall and deliver us more students from elsewhere.

And what’s the alternative? Increasing dependence on China when it has made plain what it will cost?

That is the end of Australian democracy being proposed, built into a wall of illiberal Chinese empire.

The ABC seems to be caught in some whacko spot between its own political correctness and hatred of the Coalition Government and the victim is the very liberal system upon which it relies for its existence.

David Llewellyn-Smith
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Comments

  1. boomengineeringMEMBER

    Sorry, couldn’t send link only.
    Last month Brilliance Auto Group, which has ties to BMW, was unable to redeem a 1 billion yuan bond and one of China’s biggest, and most indebted, property companies, China Evergrande, was forced to sell a major asset to raise 14.9 billion yuan to avert a liquidity crunch.
    Those defaults and stresses have raised questions about the state of China’s corporate sector and a question mark over the willingness and capacity of local governments, and the central government, to bail out troubled enterprises.
    Chinese banks and investors are reducing their bond holdings for fear that there will be more defaults as non-performing loans hit record levels. Bond yields are spiking to reflect the increases in perceived risk.
    Even China’s sovereign bonds have been impacted, with 10-year government bond yields reaching their highest levels in nearly 18 months.
    The failure of Yongcheng and the inability or unwillingness of its provincial government to bail it out before it defaulted has raised a broader concern about a credit crisis.
    There is a significant level of moral hazard in the relationship between state-owned companies and their local governments.
    The companies and their investors expect the governments to step in to avert losses of jobs and economic activity and therefore run higher levels of leverage than might otherwise be the case. The defaults question that assumption and their capacity to sustain excessive leverage.
    There have always been concerns about the levels of leverage in China’s corporate sector and within its local governments. China’s overall debt-to-GDP ratio is over 300 per cent and climbing.
    During the trade war with the US and more recently the pandemic China’s central authorities reversed what had been an attempt to reign in the loose monetary policy and excess credit and leverage that was the legacy of its massive stimulus programs in response to the financial crisis in 2008.
    They have been sending signals that they are considering another bout of tightening to withdraw the stimulus and incentives injected into the economy in response to the trade conflict and the pandemic, raising a question mark over the stability and solvency of a lot of state-owned or state-reliant enterprises if their local governments are unable to support them.
    That long-held assumption was challenged last year when Baoshang Bank was allowed to collapse, the first bank failure in China almost 20 years.
    China could end up being the only major economy to post positive growth this year.
    China could end up being the only major economy to post positive growth this year.CREDIT:BLOOMBERG
    The Yongcheng default raised particular concerns and had an impact beyond its size or Yongcheng’s own significance because it was unexpected.
    The state-owned miner’s bonds were AAA-rated by domestic credit ratings agencies because of its state-owned status, the creditworthiness of Henan province and because it had appeared to be holding ample liquidity ahead of the default – hence the investigation by the market regulator.
    Earlier this year Yongcheng’s parent company defaulted on its debt but was bailed out by the provincial government. With some cross-default provisions within the group the parent might be drawn into the new crisis.
    There have always been concerns about the levels of leverage in China’s corporate sector and within its local governments. China’s overall debt-to-GDP ratio is over 300 per cent and climbing.
    China had been attempting to address that and to clean up its more leveraged and less productive SOEs and crack down on its shadow banking sector in recent years but the trade war and pandemic forced it to abandon that effort while it tried to offset their economic impacts.
    It loosened monetary policy in response to the pandemic, albeit not to the same degree to that which has occurred in most of the major developed economies.
    While China’s growth rate has tumbled to a fraction of the six per cent or so it had been targeting before the pandemic struck – it is expected to generate something closer to two per cent this year – it is one of the few – perhaps the only – major economy likely to post positive growth this year.
    It has the capacity to deal with a credit crisis, given its high national savings rate, but there is an underlying weakness and vulnerability in its local governments, the corporate sector and the state-owned enterprises in particular that complicate the central government’s ability to implement a tightening of monetary policy.
    Baoshang Bank was allowed to collapse last year, the first bank failure in China almost 20 years.
    Baoshang Bank was allowed to collapse last year, the first bank failure in China almost 20 years. CREDIT:AP
    China’s central bank, the People’s Bank of China, was forced to pump more than 800 billion yuan into the country’s financial system this week to try to settle the bond market and avoid the liquidity crunch that could occur if other companies were unable to access the market. It may also be trying to limit the extent to which the increase in yields raises the cost of borrowing for SOEs and local governments.
    The PBOC would also be aware that, as has happened in other jurisdictions, China’s banks have provided interest and repayment deferrals until March next year, which might be disguising the extent of the problems within its corporate sector, particularly the state-owned sector and the local governments that support the SOEs.

    • The ‘hidden boss’ of China Evergrande is the brother of Wen Jiabao (former Chinese Premier). If it fails, it’ll be due to Xi Jinping cleaning up his political opponents.

    • Do you have attribution for this story? Interesting, reminds me of the start of a recession if the story was outside of China. However China is so large that it is hard to get a sense of when something is sufficiently large to shake the foundations … and has so many non-market levers that the usual way a market operates can be forestalled. So from the outside it is hard to read the likely impact on financial markets.

  2. PaperRooDogMEMBER

    “The ABC seems to be caught in some whacko spot between its own political correctness and hatred of the Coalition Government and the victim is the very liberal system upon which it relies for its very existence.”

    Same issue with all the left leaning political parties & media worldwide, pretty much.

  3. SnappedUpSavvyMEMBER

    lol its not my ABC, you are welcome to it, SBS will probably come out swinging and call Scummo a rashist for putting Australia first, lets wait and see

  4. TailorTrashMEMBER

    The University of Technology Sydney ….now that’s a larf

    Kids from China ,a country that builds super fast trains , high tec warplanes , aircraft carriers ,
    smart phones , cars and production lines out the wazoo come to a University of Technology in straya .
    …..must be the coffee that’s good .

  5. Hatred of the coalition government?? Get real, you can’t distinguish the two from each other. If the ABC did anything like its job we’d have an ICAC and some politicians in jail.

  6. “But if student numbers fall enough to do macroeconomic damage then the AUD will also fall and deliver us more students from elsewhere.”

    Students from where?
    Everyone is aware that behind smoke and mirrors of Aussie pick’n’pay education mill, there is no substance and it is purely a vessel to PR. As such it has limited customer base in China and Indian subcontinent only.
    It is cheaper to buy a diploma in other countries with slightly lesser legacy but several hundred times cheaper unis. Chinese and Indians know this but couldn’t care less as their goal is immigration.

    Aus unis are £ucked without Asian students.

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