The topic ‘CHINA Capital Flight’ has not received (in my opinion) an ample share of the headlines and I believe is a significant contributor to the Australian property bubble.
Domestically, the matrix of topics that has placed the Australian property bubble perilously out of control includes apartment oversupply, record capital growth, illegal foreign investment, FIRB fraud, Loan fraud and VOI fraud, just to name a few. But lets take a minute to speculate what external influences changed our delicate economic balance and where or how did it all begin. Reported by the Institute of International Finance, the CHINA Capital Flight crisis was approximately $700 billion in 2015.
The CHINA Capital Flight has sparked the Australian property bubble making housing unaffordable and is well documented as the wrecking ball for many of the worlds economies. Despite the Communist Party’s control over the economy and measures to restrict and limit citizens exporting capital offshore, the domestic confidence among China’s new upper class is a sentiment of “the grass is greener down under”. Moreover, Australia’s tiny economy is now considered by many as a colony of China due to our nations heavy dependencies on trade and foreign property investment. Despite the Australian bank sector clampdown, the recent discovery of VOI and Mortgage fraud has triggered grave fears for the Australian property bubble and the future of Australia’s economic health.
In conclusion, with the mass of articles published in the past six months, the Australian property bubble and crash may not be a doomsday prophecy after all.
Source: DFAT Australia and foreign investment. The total value (stock) of foreign investment in Australia stood at $3.0 trillion at the end of 2015.
Levels of Chinese investment in Australia have grown since 2005, reaching $75 billion at the end of 2015. Commercial property foreign investment increased to $39.9 billion. Non-real estate foreign investment increased to $92.8 billion
China has become Australia's biggest source of approved foreign investment for the first time after a $12.4 billion splurge on real estate last financial year. Chinese investors planned to spend $27.7 billion here according to the Foreign Investment Review Board annual report, issued Thursday, overtaking United States investors who were approved to spend $17.5 billion. Investments in real estate accounted for almost half China's total, with its $12.4 billion approved investment more than twice the amount spent by the Americans on real estate.
In 2010 the foreign property investment was valued at $20.4 billion in 2014 it increased to $47.7 billion
China has become Australia's biggest source of approved foreign investment for the first time after a $12.4 billion splurge on real estate last financial year. Chinese investors planned to spend $27.7 billion here according to the Foreign Investment Review Board annual report, issued Thursday, overtaking United States investors who were approved to spend $17.5 billion.
China suffered almost $700 billion worth of capital flight in 2015, according to the Institute of International Finance. Beijing logged $100 billion per month in average currency outflow during November, December and January but the pace of outflows had tapered off in more recent months, with net foreign exchange sales by commercial banks at $23.7 billion in April, from $36.4 billion in March, Reuters reported. The surge in outflows late in 2015 sparked market concerns that China's foreign reserves weren't sufficient to stabilize the currency by buying yuan over the long term. In April, those reserves rose to $3.22 trillion, but that's off a peak of $3.99 trillion in June 2014, according to Reuters.
The faltering Chinese economy spurred massive net capital outflows of close to $675 billion in 2015, driven mainly by foreign banks cutting credit to Chinese firms, the firms themselves paying back their debt or international investors reducing holdings of yuan, or rennimbi, deposits.