Spending time in Shanghai has highlighted the differences in perspective on either side of the China Sea. Australian political and media interests suggest that everything needs to be seen through the dark glasses of short-term American interests in their presidential electoral cycle.
Julia Gillard’s defence of barriers to Huawei engagement with the national broadband network on national security grounds have raised tensions between the two national trading partners. Miao Miao, the first secretary at China’s Canberra embassy, has very pointedly stated that Huawei had made a positive contribution to economic development in Australia.
Chinese political and commercial interests see resource and food security interests as a long-term strategic objective associated with their incoming transitional political appointments across their whole nation. Their national government wants to avoid a crash in its path to become the world’s leading economy by cutting its GDP growth rate to something around three times that of its major suppliers and competitors.
Eight out of ten of its major trading partners are located in its region and its domestic economy is taking up the slack in its export expansion. There needs to be a little caution in reviewing the small economic readjustments being made by China to address fears of a collapse in demand for our raw materials. The recent slow down more likely reflects an earlier than usual Chinese New Year cut in exports that is likely to be made up by the end of this financial year.
Zhang Zhiwei, chief China economist at Nomura in Hong Kong, who cautioned against reading too much into the data given the underlying volatility caused by the Chinese Lunar New Year holiday, says: “There is a bright spot in that imports, particularly imported components for export purposes, were weak in January, but became a bit better in February. My expectation is that March and April exports will pick up a bit from this level.”
The reality appears to be that Chinese banks are taking steps behind the scenes to mitigate the risks of a global financial collapse and other threatened outcomes of the European crises. The recession in Europe is having a negative impact on Chinese exports, but industrial imports remain strong and firms are continuing to expand export production and take more forward orders.
At the same time, while the RBA refuses to pump any more liquidity into its multi-speed economy, the People’s Bank of China has announced that the target for the growth of the money supply for 2012 would be 14%, the same as for last year.
Chinese banks show an increasing willingness to lend to small business seeking to promote trade between Australia and Asia and gain a seat at the table of major resource suppliers. Fixed asset investment to underpin economic development remains a core element in the forthcoming five-year plans.
Fang Xinghai, director-general of the government Shanghai Financial Services Office, says the growing business interests of Chinese companies in Australia means that it makes sense for banks to follow their clients here in the same way that the ANZ is promoting entry into the fast growing economy. Five Chinese banks have established a base in Australia but only the Bank of China has a limited retail license.
Smart Australian companies will appreciate the potential of a half a billion middle class purchasers in the region by 2020 and avoid the bull in the China shop approach of politicians seeking to avoid their own myopic view of this fantastic land of opportunity.
Andrew Sadauskas is a former journalist at SmartCompany and a former editor of TechCompany.
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