future of chinese buying

The future of Chinese buying in Australia hangs in the balance today as the chinease might do something to teach their banks which could slow down their purchasing in Australia.


Has anyone been following china? As we all know they have been buying massive amounts of Australian property, most of the stuff they buy they leave stood empty, collecting it like stocks for appreciation only.

I looked into why and found some things of interest.. in short US had subprime, chinease have created a shadow banking system which sounds the same and has grown over the last 5 years my understanding is:

In the 2007 GFC all the chinease factorys started closing down and everyone lost their job so china decided to stimulate the economy.
Their banking system was worth $10 Billion in 2008, since then they chinease government pumped in another $3Trillion and private investors borrowed another $12 Trillion, adding $15 Trillion of debt to their banking system.
All this money was spent building property and giant cities, dispersing farmers on $2 a day and replacing their farmland and houses with new $600K USD apartements..
They have finished spending this $15 Trillion now, and no one is moving into these new homes, 60 million of them left empty.
Chinease are worried about their local economy failing like US Subprime but see Australia as the Switzerland of Asia, so are now buying up Australian property even harder to protect their money.
All the workers in china are now losing their jobs now the money is no longer being pumped in, factorys are closing down in droves and the ones that are still running are only operating at about 50% of what they used to.

Companies are now defaulting in droves and china has always bailed out every defaulter to keep their banking system safe, but now 100’s of billions of $ are expected to default this year in the shdow banking system and china is looking like its going to now not bail people out (just like what happens in the west). If this happens then chinease banks will no longer be in a no risk world and need to price in risk, they may also start pulling in loans they are worried about defaulting in future.

Today one of the solar panel factorys is defaulting. If china start to sit back now and force the banks to become responsible in china, could this kick of a credit crunch that would not only see all the chinease buyers disappear, but also see them starting to dump these 10’s of thousands of empty homes they have in Australia?

Some interesting links here:

http://blogs.wsj.com/moneybeat/2014/03/05/why-a-china-default-could-be-a-good-thing/

http://www.bloomberg.com/news/2014-02-21/vicious-cycle-seen-as-ore-pile-evokes-steel-bust-china-credit.html

http://ftmdaily.com/daily-briefing/021814/

http://www.newsmax.com/Outbrain/billionaires-dump-economist-stocks/2012/08/29/id/450265

http://www.theage.com.au/business/property/locals-priced-out-by-24b-chinese-property-splurge-20140305-346hd.html