The new <a href="https://www.apartments.com.au/new-apartments/yarraville-green-42-stephen-street-yarraville-vic-3013">Yarraville Green</a> development in Melbourne's inner west is showing that landscaping can be just as influential as architecture, with buyers responding strongly to the garden-first approach adopted from the outset by developer Excelon Projects and the project's design team.

Excelon appointed Six Degrees Architects and landscape architects SBLA to work collaboratively on the development, with a brief to create "a sustainable, design-led building with a focus on community."

That approach has resonated with buyers. According to Next Chapter Director Tom Hirini, who is leading the sales campaign, the landscaped communal garden has become one of the project's defining features, alongside its boutique scale and European-inspired cluster housing concept.

Local downsizers, right-sizers and established families already living in Yarraville and surrounding suburbs have accounted for the majority of purchasers.

[smartcode_project:default project_id=144913 project_image_fid=297740]

Yarraville Green will comprise 53 homes, including apartments and townhomes, arranged around the shared central garden to maximise connections to the landscaped open space. Parking has been moved underground, allowing the ground plane to be dedicated to greenery, pedestrian movement and communal spaces.

The landscape extends well beyond passive planting. Productive garden beds, a pergola, communal gathering spaces, garden sheds and a pet wash have all been integrated into the masterplan, creating spaces designed to encourage everyday interaction between residents.

[smartcode_project:default project_id=144913 project_image_fid=297741]

The interiors continue Excelon's focus on craftsmanship, incorporating bespoke elements by Melbourne artisans including leadlight detailing by Adadaz, hand-turned timber hardware by Auburn Woodturning and blown-glass lighting by Ruth Allen.

Sustainability has also been embedded throughout the project, with Yarraville Green targeting an average 7-star NatHERS energy rating through passive design principles, rooftop solar servicing common areas and rainwater harvesting for landscape irrigation.

[smartcode_project:default project_id=144913 project_image_fid=297735]

Construction continues to progress at Yarraville Green, with structural works well underway and framing works approaching completion under builder Balmain &amp; Co. The project remains on track for completion in mid-2027.

Apartments at Yarraville Green are currently priced from $625,000, while townhomes start from $1.4 million.

[smartcode_project_cta:default project_id=144913]

Joel Robinson

Garden-led design drives buyer demand at Yarraville Green

National diversified developer Fortis has officially launched Crest &amp; Walker, its latest Brisbane apartment development, with construction now underway on the 20-storey Newstead project.

Award-winning builder BINAH has commenced construction on the Bureau^Proberts-designed building, which will deliver a limited collection of 65 two and three-bedroom apartments on Kyabra Street.

[smartcode_project:default project_id=145922 project_image_fid=373556]

The project marks Fortis' fourth active residential development in Brisbane, following River House, which is nearing completion, alongside projects in New Farm and Hamilton as the national developer continues to expand its South East Queensland pipeline.

Fortis General Manager – Development Queensland Dan Boman said Crest &amp; Walker reflects the developer's long-term commitment to delivering design-led residential projects in Brisbane's established inner-city suburbs.

"We're proud to be strengthening our presence in Brisbane with Crest &amp; Walker, particularly in such a sought-after lifestyle destination as Newstead," Boman said.

"Every Fortis project is shaped by its context, and we approach each one with the respect and care it deserves.

"Our focus is always on creating places that feel connected to their neighbourhood and elevate the everyday experience for residents. Newstead continues to evolve as one of Brisbane's most sought-after urban communities, and Crest &amp; Walker reflects our ambition to contribute meaningfully to that story."

[smartcode_project:default project_id=145922 project_image_fid=373559]

Positioned between Gasworks Plaza and James Street, <a href="https://www.apartments.com.au/new-apartments/crest-walker-newstead-12-kyabra-street-newstead-qld-4006">Crest &amp; Walker</a> has been designed as a boutique residential address offering privacy and generous living spaces within one of Brisbane's most established lifestyle precincts.

The building features a contemporary brick podium softened by integrated landscaping, while the upper levels are characterised by restrained architecture and enduring materiality. Interiors have been designed to maximise natural light, acoustic performance and long-term liveability.

[smartcode_project:default project_id=145922 project_image_fid=373583]

Residences comprise spacious two and three-bedroom floorplans, with two-bedroom apartments priced from $1.55 million and three-bedroom, half-floor residences from $3.95 million.

Residents will have access to a wellness-focused rooftop featuring a swimming pool, sauna, steam room, landscaped dining spaces and outdoor lounge areas overlooking Newstead and the Brisbane CBD.

[smartcode_project:default project_id=145922 project_image_fid=373571]

Sales are being managed by Slaite Projects, with Fortis expecting strong demand from owner-occupiers seeking a high-quality, design-focused apartment in one of Brisbane's most tightly held inner-city suburbs.

Completion of Crest &amp; Walker is slated for late 2028.

[smartcode_project_cta:default project_id=145922]

Fortis expands Brisbane pipeline with launch of Crest & Walker in Newstead

The enormity of delivering a true skyscraper in Australia's new development market is often overlooked.

It has taken the best part of a decade since plans for Chevron One were first unveiled, but the 41-storey tower is now complete, with residents collecting their keys and moving into what has become one of the Gold Coast's most recognisable new landmarks.

Rising 127 metres above Chevron Island, Chevron One stands almost twice as high as any other building on the island. Its scale places it alongside the trio of towers at Jewel, arguably the last truly significant addition to the central Gold Coast skyline when they were completed around six years ago.

While there are several developments underway around a similar height to Chevron One, they are more concentrated within clusters of the highest towers in the city. The fact Chevron One sits within a developing precinct, looking back at the other high-rise developments in Surfers Paradise and Broadbeach, makes it a different proposition altogether. It will certainly become a reference point on the Gold Coast skyline.

[smartcode_project:default project_id=6515 project_image_fid=68833]

Developer Bensons Property Group is behind the 41-storey tower, which has 229 apartments, along with an exhaustive list of resident amenity spread across what is the largest development site ever assembled on Chevron Island.

The tower has been the talk of the town for years, says Ray White Projects Gold Coast agent Caitlin Rosenboom, who is selling the remaining apartments.

"People have been watching Chevron One go up for years," Rosenboom says, adding that many prospective buyers have been surprised by the scale of the views once they step inside.

"It's only when they walk through a completed apartment that they truly understand the position of the building," Rosenboom says.

"The views are jaw-dropping. Whether you're looking east over the ocean, across Surfers Paradise, along the river systems or out to the hinterland, every level offers something different but equally impressive."

[smartcode_project:default project_id=6515 project_image_fid=360215]

One of Chevron One's defining advantages is its location on the eastern side of Chevron Island on Stanhill Drive, a position which protects the views forever.

"There's only one row of houses between Chevron One and the water, and the height restrictions along the river means views from Chevron One can never be built out,"&nbsp;Rosenboom says.

While new apartment developments continue to emerge across the Gold Coast, Rosenboom says opportunities to secure a completed apartment with this level of outlook are becoming increasingly rare.

"The size of the site is something that would be incredibly difficult to replicate today," she says.

"That's allowed Chevron One to deliver the sort of amenity, open space and resident facilities that very few projects can offer. There are not many completed apartment buildings on the Gold Coast right now that can compete with the combination of scale, quality and amenity."

[smartcode_project:default project_id=6515 project_image_fid=68839]

There's around 2,000 sqm of amenity solely for the use of residents of Chevron One. Club One features a uniquely shaped swimming pool that mirrors the footprint of the building itself, set within a extensively landscaped gardens. There's also an indoor pool and spa, a fully equipped gym with a Pilates room, a yoga garden, a bookable private dining area and lounge that can host up to 30 people, and a 24-hour concierge service.

As for the buyers, Rosenboom is fielding enquiry from everywhere: Sydneysiders and Melburnians looking at the new and off-the-plan market following the changes in the Federal Budget, as well as those looking to relocate, through to South East Queenslanders seeking either a permanent home or a weekender bolthole.

"The Gold Coast lifestyle continues to resonate with people relocating from the southern states, and when they see the views and the quality of what's been delivered at Chevron One, it becomes very easy for them to understand the appeal," Rosenboom says.

A diverse mix of one, two and three-bedroom apartments remain available, with each offering "something a little different", be it the orientation and views, configuration, or level, to suit a wide variety of buyers.

The remaining apartments are ready to inspect in person, by appointment.

[smartcode_project_cta:default project_id=6515]

A decade in the making: Residents to move into Chevron One as construction wraps up

A general rule of thumb in new apartment developments is that the penthouses get the rooftop.

It's a formula that's become commonplace across Australia's apartment market. Residents might have access to a pool, gym or barbecue facilities on a dedicated lower level, but the most desirable outdoor spaces are typically reserved for the highest-priced homes at the top of the building.

<a href="https://www.apartments.com.au/developers/sherpa-property-group">Sherpa Property Group</a> has taken the opposite approach.

Rather than dedicating the rooftop to a handful of buyers, the Gold Coast developer has made it the centrepiece of its Flourish collection, creating expansive shared spaces from the best vantage point in the building.

The philosophy has reached its most ambitious expression at <a href="https://www.apartments.com.au/new-apartments/flourish-soleira-palm-beach-1150-1160-gold-coast-highway-palm-beach-qld-4221">Flourish Soleira</a> in Palm Beach, where two rooftop precincts connected by a skybridge will deliver one of the most extensive lifestyle offerings seen in a residential apartment project on the Gold Coast.

[smartcode_project:default project_id=150017 project_image_fid=374053]

"We're seeing a clear move toward developments that offer more than just an apartment," Sherpa Group founder Christie Leet said.

"People want spaces that support how they actually live, whether that's working from home, staying active, or spending time with family and friends.

"That's where amenity becomes critical. It's not just about what's included, but how those spaces are designed to be used every day."

[smartcode_project:default project_id=150017 project_image_fid=374052]

The breadth of amenity has already attracted buyers across multiple demographics. Younger first home buyers have been drawn to Soleira's one-bedroom apartments, a product rarely delivered in Palm Beach, while families have responded to practical inclusions such as the shallow children's pool adjoining the main lap pool and the extensive communal recreation areas.

Instead of a single rooftop, Soleira delivers two distinct lifestyle zones.

[smartcode_project:default project_id=150017 project_image_fid=372547]

The southern rooftop has been dedicated to wellness, featuring a gym, yoga and Pilates studio, work-from-home facilities, a wellness centre, spa, and hot and cold plunge pools.

The northern rooftop focuses on recreation and entertaining, incorporating a heated resort-style pool, private dining rooms, pizza ovens, barbecues, a golf simulator, children's recreation areas, and what is expected to be the Gold Coast's first rooftop basketball court, which will also double as a squash court.

[smartcode_project:default project_id=150017 project_image_fid=374054]

Beyond the rooftops, Soleira will introduce 1,500 sqm of curated retail beneath the towers, creating one of Palm Beach's first genuinely mixed-use lifestyle precincts where cafés, restaurants and convenience retail become part of residents' everyday lives.

Sherpa has also retained management rights across the development, allowing it to oversee the long-term operation of the building through a 24-hour concierge model. The developer is also exploring additional revenue streams within the precinct aimed at helping offset ongoing body corporate costs for residents.

[smartcode_project:default project_id=150017 project_image_fid=370962]

While Soleira is the largest project Sherpa has delivered, the rooftop-first philosophy has been evolving for several years.

It began with <a href="https://www.apartments.com.au/new-apartments/amargo-6-12-sixth-avenue-palm-beach-qld-4221">Flourish Amargo</a>, the first project released under the Flourish brand. Rather than competing at the ultra-luxury end of the market with oversized half-floor and full-floor residences, Sherpa focused on creating lifestyle-driven apartments supported by resort-style shared spaces.

Amargo introduced more than 800 sqm of rooftop amenity, combining wellness facilities, heated pools, entertaining areas, cabanas, pizza ovens and private dining spaces into what was designed as an extension of residents' homes rather than a facility used only occasionally.

[smartcode_project:default project_id=146527 project_image_fid=366550]

That approach continued with Flourish Oasis, where the same amenity-led philosophy was refined into a more boutique development. Strong demand from Sherpa's growing VIP database saw much of the project sold before it reached the broader market, reinforcing buyer appetite for apartment communities centred around shared lifestyle experiences.

Flourish Amargo is slated for completion mid-way-through next year, with Oasis to be delivered by late 2027. Flourish Soleira is expected to complete in 2030.

[smartcode_project_cta:default project_id=150017]

Sherpa takes amenity to the sky as Flourish Soleira captures booming Palm Beach demand

As apartment living continues to evolve across Sydney's growth corridors, the quality and distribution of shared spaces is increasingly shaping how residents experience home. Rather than functioning as add-ons, amenities are being embedded into the daily rhythm of a building, supporting everything from quiet retreat to social interaction, often within a single vertical community.

At <a href="https://www.apartments.com.au/new-apartments/aeris-melrose-park-nursery-street-melrose-park-nsw-2114">Aeris</a> in Melrose Park, this approach is resolved through a layered amenity offering that unfolds from ground level through to its upper podium. Developed by <a href="https://www.apartments.com.au/developers/sekisui-house-australia">Sekisui House Australia</a> in partnership with Hankyu Hanshin Properties, the project introduces 468 apartments across two towers and a mid-rise building, positioned at the highest point of the broader masterplan.

[smartcode_project:default project_id=426 project_image_fid=359199]

The amenity experience begins at street level, where two courtyards sit within a landscaped setting that connects residents to the wider network of parks and green spaces. These green spaces are not isolated pockets but part of a wider pedestrian network that links Aeris to the surrounding <a href="https://www.apartments.com.au/developments/melrose-park-nsw-2114">Melrose Park</a> precinct, including Central Park, future schools, and the Town Centre opening in July 2026. The result is a transition that moves from public to private without abrupt boundaries, allowing residents to pass through shaded, tree-lined environments before reaching the building itself.

Moving upward, the focus shifts to the level five podium, where the primary communal facilities are concentrated. This space brings together a 16-metre swimming pool, outdoor seating areas, and a communal BBQ zone arranged to take advantage of elevated outlooks. Seating is positioned beneath pergolas, creating pockets of shade that extend the usability of the space throughout the day. The pool edge aligns with views toward the wider district, reinforcing the sense of elevation that defines the project’s positioning.

In the adjacent building, this is complemented by quieter, more contemplative spaces, including an outdoor cinema set within the same level. Positioned to operate primarily in the evening, it introduces a different tempo to the shared environment, shifting from daytime activity to after-hours use without requiring separate zones.

[smartcode_project:default project_id=426 project_image_fid=360299]

The podium also accommodates an intimate private resident gym. Located on the lower levels, it gives residents convenient access to fitness facilities without leaving the building.

Above, the elevated podium sky deck extends the amenity offering, providing additional open-air spaces with elevated outlooks across the surrounding landscape. While more restrained in program, this upper level reinforces the project’s vertical progression, from ground-level greenery to elevated outlook, allowing residents to move between distinct spatial conditions within a single address.

This distribution of amenities reflects a deliberate response to how residents use space across the day. Sekisui House Australia Sales and Marketing Director Peter Kalaf points to the role these shared areas play in shaping buyer demand. Aeris has been conceived as more than a collection of apartments, with the podium pool, gym and outdoor cinema forming part of a broader lifestyle offering that extends the home beyond each individual residence.

[smartcode_project:default project_id=426 project_image_fid=360300]

What distinguishes Aeris is not the inclusion of these elements individually, but how they are arranged in relation to one another. Active, social, and passive spaces are layered vertically rather than separated, allowing residents to choose between them without leaving the building or moving far from their apartment. This proximity supports both routine use, such as a morning swim or evening workout, and more occasional gatherings, whether around the BBQ area or within the cinema setting.

The amenity design also sits within a broader framework of connectivity across Melrose Park. The Melrose Park Town Centre, anchored by Coles and Dan Murphys, features a mix of retail, dining, health and lifestyle offerings, bringing everyday convenience closer to residents. By the end of the year, more than five hectares of parks and open space, equivalent to around seven football fields of green space on residents' doorstep, will further enhance the precinct, allowing the internal facilities at Aeris to operate as an extension of the wider neighbourhood rather than a substitute for it.

Construction at Aeris continues to gather momentum, with ground floor slabs expected to be completed in late 2026 before the first sections of the buildings begin to rise above ground.

[smartcode_project_cta:default project_id=426]

Elevated amenity anchors daily life at Aeris, Melrose Park

China

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Foreign investor interest in Australia remains strong, the Foreign Investment Review Board (FIRB) chair David Irvine suggests.
But the latest FIRB report revealed a strong shift with the United States stepping up its investment in the 2017-18 period accompanied by declining Chinese investment easing into second place.
The United Kingdom, Singapore, Canada, the Netherlands and France make up the top seven.
The latest report on foreign investment showed the US recorded a $10 billion increase in approved investment to $36 billion in 2017-18, with significant increases in real estate and the manufacturing, electricity and gas sectors.  
China was the second largest source country with a $15 billion decrease in approved proposed investment to $23 billion.
The reduction in approved Chinese investment was due to falls across all investment sectors but especially property. Chinese proposed investment peaked at $47.3 billion in 2015–16.  
Chinese investment in real estate dropped to $12.7 billion in 2017-18 from $15.3 billion the year before, though still accounted for a quarter of foreign real estate investment.
Victoria gets the greatest share of Chinese residential investment with 46% of all approvals, with NSW in a distant second with 23% followed by Queensland's 17%.
The data doesn't track people who don't need to request approval, which means NSW might be actually getting more investment. 
But it seems Melbourne retains advantages over Sydney in terms of prices and taxes. 
Chinese buying is being impacted by several factors, local and international.
There's been the unexpected cancelling of promised mortgage loans by Australian banks, plus the higher foreign stamp duty taxes, along with Chinese government capital controls making it more difficult to move money from China, suggests Carrie Law, the boss of the Chinese property portal Juwai.
"We expect Chinese buying to be flat in 2019," Law thinks.
I don't think we ought regard the recent trend as permanent given tailwinds that will support Chinese buying including the still-strong Chinese wealth growth.
There is the desire to get a bargain while the market is soft. Plus, Law suggest there is a lack of investment opportunities in China, along with a possible shift in investment from the U.S. to Australia due to any emerging trade war.
Additionally the yuan’s weakness is not holding back investment in property as there is an advantage in currency rates in favour of Australia compared to other major countries. 
The Chinese also lack appealing alternative investments at home.
Interestingly, the Federal Government's crackdown on residential properties held by foreigners in breach of the foreign investment rules uncovered just 131 now-sold illegally held properties in 2017-2018.
No nationalities were advised in the figure which was up slightly from the 96 ordered forced sales in 2016-17.
There were other breaches that did not see any forced divestment.
More than half the breaches identified were residential property in Victoria, while 20% related to property in New South Wales after the Australian Taxation Office (ATO) completed around 1,400 residential real estate investigations during the year.
ATO data matching analysis is increasingly important in compliance investigations. 
Data matching made up 63% of the 1,700 cases investigated in 2017–18.
Although information received from the community is a source of intelligence, only a small proportion actually involved a breach of the Act.
The report noted that in most cases the owners of the properties reported by community members were found to be Australian citizens or permanent residents.
That suggests we might a little too quick to judge our new neighbours.
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jchancellor-FAypfDUnLy

Australians are too suspicious of the nationality of our new neighbours

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GUEST OBSERVATION
Through 2018, annual growth in China continued to decelerate, from 6.8% at March to 6.4% in December. The annualised pace in the December quarter was weaker still, circa 6.0%. These are outcomes reminiscent of the GFC low of March 2009, so it is not surprising that many in financial markets are concerned about 2019 and beyond. From the official PMI’s, a broad-based slowdown is evident across manufacturing and, to a lesser extent, services, led by a deterioration in external demand.
Regarding trade, it is important to note that the shock being experienced by China currently is having flow-on effects for the rest of Asia, especially the north-east Asia block. Taiwan and Korea have high exposure to China demand, shipping 31% and 27% of their exports respectively to China in 2018. A large bulk (45-57%) of Korea, Taiwan and Japan’s exports to China are machineries, reflecting these economies’ involvement in China’s production chain. These economies’ exports of machineries have been weakening since November, particularly Korea and Japan which saw their exports of machineries to China plunge by 15%yr and 14%yr respectively in December. Weak imports of upstream goods by China do not bode well for China’s export outlook in the months ahead. The impact from weakening external demand is also being felt in domestic production across the region, given the high correlation between production and exports in a number of Asian economies. More than half of the Asian economies we monitor registered manufacturing PMIs below 50 in January.
Although the market’s focus remains on the effect of the global slowdown and US/China tensions on trade, the key determinant of China’s softer growth in 2018 was actually structural change, planned and managed by China’s central government. Put simply, in pursuit of long–term financial stability and sustainable growth, 2017 and 2018 saw China’s economic authorities focus on the quality of growth, particularly its longevity; equitable distribution; and environmental impact, with far ranging implications.
While we cannot ignore the risks apparent in China’s external position, that the pursuit of ‘quality growth’ is at the core of this slowdown and given Chinese authorities’ capacity and willingness to aid momentum, we look to 2019 and 2020 first and foremost with optimism rather than concern, anticipating growth will be sustained around 6%. Below we outline the key effects of the pursuit of ‘quality growth’ across three sectors (trade; investment; and the consumer), and also assess recent changes to market policy to facilitate it.
<a href="https://www.propertyobserver.com.au/images/2019/2/19/china%20slowdown%201.jpg" target="_blank">Click here</a> to enlarge:
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2019/2/19/china%20slowdown%201.jpg" alt="">
Source: Westpac
The outlook for trade: opportunity close to home
The immediate threat to China from US trade policy is real and pressing. Following the pull-forward of activity to front-run the tariffs’ introduction, export growth is set to weaken in 2019. However, taking a longer view (2020 and beyond), it is important to remember that any negative shock can be offset in time.
The US only receives about 20% of China’s total exports. China therefore has considerable opportunity to grow total exports even if US trade remains under pressure. Further, the Belt and Road initiative provides scope for assembly and low-value-add parts production to be moved to neighbouring economies, where US tariffs do not apply. With these factories still owned by Chinese firms, US’ tariffs can be bypassed while preserving China’s profits. Doing so would have the additional benefit of making room within China’s borders for manufacturing to shift up the technology spectrum, to the nation’s long-term benefit.
This development path should, in time, facilitate the building-up of wealth and consequently discretionary consumption. Regarding consumption, higher demand for overseas travel (tourism and education) will remain a negative for China’s trade position. However, there is prospect for some of this drag to be offset.
As China’s domestic service industries continue to develop and Belt and Road linkages grow, opportunity to diversify China’s export base across services will multiply. Construction, financial services and in-bound travel are all good sectoral examples.
<a href="https://www.propertyobserver.com.au/images/2019/2/19/china%20trade.jpg" target="_blank">Click here</a> to enlarge:
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2019/2/19/china%20trade.jpg" alt="">
Source: Westpac
The outlook for investment: quality to remain key
The shift in policy in favour of quality growth was most clearly evident in the investment detail, as historically-troublesome forms of investment such as poorly-planned infrastructure investment by local government authorities was sharply curtailed. As a consequence, growth in fixed asset investment across the economy slowed to historically weak levels: a low of 5.3%ytd at August and 5.9%yr for 2018 overall, as investment by State-owned Enterprises effectively stalled at 1.9%yr.
With the initial re-orientation of the economy towards quality growth achieved, authorities are increasingly acting to boost momentum. This is happening on two fronts. First, local government authorities are being encouraged to borrow directly from the market to fund new infrastructure – here, a brief RMB1.3trn surge of issuance seen in the September quarter 2018 and the issuance pipeline for 2019 provides a basis for cautious optimism. Secondly, the reserves of banks are being released by cuts to the Reserve Requirement Ratio, –350bps over the past year.
Regarding bank lending, authorities are encouraging banks to focus on up-and-coming industries, where there is maximum long-term benefit for China. However, loan availability for established businesses and the household sector is also being supported.
In stark contrast, opaque elements of the non-bank sector (trust and entrusted loans) remain under pressure from new regulation. Most notably, trust funding from banks has been curtailed by their need to report trust asset exposures. Non-bank funding has also been severely reduced by the banning of guarantees on Wealth Management Products (WMPs) and a need to specify where funds raised from households via WMPs will be invested.
One element of the non-bank sector that is showing promise however is capital market issuance, particularly debt markets, with authorities looking to encourage large firms to preference market issuance over bank loans to fund their capital needs. It should be noted though that many banks are investing in debt market instruments rather than new loans – hence the desire to free-up bank lending for smaller businesses and households has not been a complete success.
In 2019, our core expectation is that growth in fixed asset investment will stabilise at or a little above its end-2018 level. This is low by historical standards, but as the average quality of projects developed should be materially higher than in the past, the dividend to growth should be much improved. Key to investment’s overall performance will be investment by the private sector.
In the near-term, stronger growth in the private sector will require continued active promotion by authorities. Looking further out to 2020 and beyond however, market forces should increasingly take over from the government as the driver and assessor of investment projects. For China and its business community, increased economic and political engagement within Asia offers open–ended opportunity that will drive successive waves of investment on and offshore. As above, both forms of investment hold opportunity for China’s long-term growth and wealth.
The outlook for the consumer: income distribution crucial
In 2018, consumption (by both households and government) was the primary driver of aggregate growth. This result was a continuation of a long-standing trend, although the scale of the acceleration in 2018 was atypical. If 2019’s contribution is to match that of 2018, then the consumer must be on a sure footing.
The cyclical downswing in external demand makes this difficult. Employment growth across both manufacturing and services has clearly been affected by weaker external demand which seems unlikely to improve quickly. There is therefore a pressing need for investment in the domestic economy to spur offsetting growth, and with it job and income creation.
This highlights the need for a further easing of financial conditions, to make funds available to private and public enterprise at low cost, as well as continued encouragement of infrastructure investment by local authorities. Greater education attainment and entrepreneurialism also needs to be fostered, to make ready the workforce for the opportunities to come, while long-term household wealth needs shepherding.
On wealth, housing remains the sector’s primary asset. To preserve affordability and opportunity, house price growth needs to spread across the tiers and be aligned to income growth. To do so, a tight rein over investors will remain necessary to avoid the wealthy profiting from households down the income spectrum.
Further progress is also needed in the management of wealth ex-housing. The changes made to WMPs are a start, but new well-structured product now needs to be developed by the industry and invested in by households for the long term.
Policy and markets
Access to credit the priority
Recent monetary policy easing has had two inter-related targets, promoting lending to small enterprise and reducing funding costs.
Monetary policy has been eased since late last year, with the TMLF (targeted medium-term lending facility) launched on 19 December (with the first auction on 23 January) and given additional re-lending of funds. At the turn of the year, there was also a relaxation of the criteria for banks to enjoy lower reserve ratios (referring to the targeted reserve ratio cut announced back in January 2018). The eligibility for access to various liquidity facilities is mainly linked to the amount of loans extended to small enterprises. These policies apparently aim to encourage and support lending to small enterprises, and are in line with the policy direction expressed in the earlier economic work conference, which continued to use “prudent” to describe monetary policy but dropped “neutral”.
Another policy aim is to reduce funding costs. Most of the liquidity released via the 100bp cut in the Required Reserve Ratio (RRR) in January was to cover maturing MLF (medium-term lending facility) in Q1. Liquidity via a lower RRR is longer lasting, and the cost of funding much lower. Consider the 1yr MLF rate at 3.3% versus the 1.62% interest rate on required reserves; for the CNY1.2trn of MLF replaced, interest cost is reduced by CNY20bn. Provision of more long-term and low-cost liquidity is warranted to encourage lending to support constructive economic activities – in line with the official stance of adopting more counter-cyclical measures to promote growth.
Outright rate cuts?
There is an opinion in the market that the PBoC may need to cut interest rates. At this stage, we still believe that quantitative tools are more likely to be deployed. If there is an interest rate cut, it is more likely to be in bank lending rates than OMO (open market operation) reverse repo rates. First, funding costs can be effectively lowered through the use of different liquidity facilities, without an outright interest rate cut. Second, when it comes to getting OMO rates and bank lending/deposit rates more in line with each other, our interpretation is that the higher bank rates ought to be brought nearer OMO rates. That said, if the benchmark 7-day repo rate falls near the 2% level and stays there sustainably, then the PBoC may need to adjust OMO rates to play catch-up.
De-leveraging goes slow
While the de-leveraging campaign may still be on the agenda, it has been progressing less aggressively since Q4-2018. The shadow banking sector – proxied by the three off-balance sheet items under aggregate financing – shrank at a less rapid pace during Q4-2018 than in earlier quarters, and rebounded in January. The growth in RMB loans has not been quick enough to absorb the loan demand diverted from the shadow banking sector. This may justify a less aggressive de-leveraging campaign as a transitory solution, before credit accessibility is further enhanced via both bank loans and the capital market.
Bond supply versus inflows
An easing monetary policy backdrop and sustained bond inflows are supportive of the bond market. We expect bond yields to consolidate around current levels towards end-Q1 amid potentially heavier supply before facing renewed downward pressure later in the year. There may be heavier cash bond supply in Q1 than usual. First, the special LGB (local government bond) issuance quota for 2019 has been front-loaded, and the full-year quota is also touted to be a 60% increase over last year’s. Gross issuance of special LGB totalled CNY76.9bn in Q1-2018, representing a meagre 4% of 2018 full-year gross issuance. This amount can be easily surpassed in Q1-2019 if primary market activity starts to pick up in late February/early March. Second, the implication from the Central Bank Bills Swap (CBS) is a combination of neutral liquidity impact but with potentially more cash bond supply – though these bonds do not directly compete with CGBs (China Government Bonds).
There is likely to be a further easing in liquidity and credit through the year. We have pencilled in a 100bp RRR cut in each of the quarters from Q2 to Q4 this year. After cash bond supply is absorbed, we expect renewed downward pressure on yields and rates. In addition, bond index inclusion could mean sustained bond inflows. The confirmation of inclusion of Chinese bonds into the Bloomberg Barclays index had been well anticipated. Assuming a total of USD2.5trn of funds track the index, we believe index inclusion will lead to up to USD150bn of potential inflows over a 20-month period, or CNY50bn per month. This equates roughly to the average monthly inflow into CNY bonds in 2018.
CNY: no obvious outflow pressure
<a href="https://www.propertyobserver.com.au/images/2019/2/19/CNY.jpg" target="_blank">Click here</a> to enlarge:
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Source: Westpac
We now expect the next US rate hike to come in June instead of March. Hence upward pressure on USD/CNY triggered by USD strength is likely to be delayed. That said, trade relations remain a swing factor, while the impact of tariffs on the regional supply-chain is already evident and the outlook subdued. On balance, USD/CNY is likely to trade in ranges with mild upside risk.
USD/CNY should face strong resistance at the 6.85-6.90 area. Indicators including banks’ FX sales and settlement, PBoC forex purchase, and foreign reserves do not point to obvious outflow pressure. The potential bond inflows triggered by index inclusion is significant compared with other BoP items, and should present a key support to the CNY in the face of our expected USD strength going into the second half of the year.
The USD/CNY forward points have been falling until recently, as US-China interest rates differentials were compressed. The offshore USD/CNH forward points fell alongside, closing the gap with onshore. We view the movement in offshore points as primarily driven by onshore, while there has been a minimal addition to offshore CNH liquidity through the two main channels – stock flows and trade flows. As the onshore-offshore forward point differentials have narrowed and with CNH liquidity limited, CNH forward points may become more sensitive to any change in liquidity condition onshore or offshore.
Elliot Clarke is a senior economist at Westpac and can be <a href="https://www.westpac.com.au/news/authors/elliot-clarke/" target="_blank">contacted here.</a>
Frances Cheung is the Head of Macro Strategy Asia at Westpac. 
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j.ballantyne1990-6AQqhLzZaK

China in 2019 - headwinds and opportunity abound: Westpac

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There were a record numbers of tourists visiting Australia last year, according to CommSec.
However, over the year to December, Australia saw its slowest growth rate in tourist arrivals since February 2012.
Tourist arrivals rose by 0.6 percent to 782,700 in December, a 4.9 percent increase over the year.
Tourist departures also rose in December, by 1.2 percent, to be 8 percent up over the year, the strongest annual growth rate in 19 months.
There were more tourists coming to Australia from Greater China, which incorporates China and Hong Kong (mainland China 122,600; Hong Kong 25,900), than New Zealand (115,600).
The increase made China the largest source of tourists to Australia. The 1,444,900 tourist count was up 4.4 percent over the year.
There was also a record number of Indian tourists to Australia, 358,200, up 18.1 percent.
New Zealand tourists also saw a rise, to $1,384,900, an increase of two percent.
The month of December saw record tourist inflows from Canada.
Heading the other way, there were a record number of Aussies traveling to Samoa, the UK, Germany, Switzerland, Poland and Indonesia.
There were record figures in the number of permanent and long-term arrivals in Australia in December. Arrivals over the year reached a record high 832,560, a 7.1 percent increase, thanks to a further 62,890 entrants in December.
 
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jrobinson-rf4aSBido9

Australia sees record number of tourists in 2018, but growth slows to six year low

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Two Australian Chinese-language papers devoted their weekend front pages to an open letter backing exiled billionaire property developer Huang Xiangmo, whose permanent residency was cancelled for reasons including character grounds in early February.
<p data-gtm-vis-recent-on-screen-6236702_632="1550404332083" data-gtm-vis-first-on-screen-6236702_632="1550404332083" data-gtm-vis-total-visible-time-6236702_632="4000" data-gtm-vis-has-fired-6236702_632="1">It says the Morrison government's decision to cancel Mr Huang's residency was outrageous and calls for it to be overturned.
The letter appears to be a paid ad.
The letter, which appeared on the front pages of the Sing Tao Daily and Australian Chinese Daily and inside a third, the Daily Chinese Herald on Saturday.
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They came with 128 community groups protesting the decision to effectively bar Huang from Australia after the Australian Secret Intelligence Organisation (ASIO) advised he was "amenable to conducting acts of foreign interference".
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The letter features a smiling photo of Huang atop an image of the Australian flag.
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<div class="_1lC_G">The letter says Mr Huang is an innocent philanthropist and businessman, and that any member of the Chinese community in Australia could share his fate which sees the media and politicians using information from the security services to demonise Huang.</div>
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Huang has calledAustralia's actions those of a "giant baby".
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Billionaire property developer Huang Xiangmo gets front-page local support against ban

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In the iconic book The Lucky Country, author Donald Horne described Australia as the <a href="http://www.abs.gov.au/ausstats/abs@.nsf/lookup/Media%20Release10" target="_blank">first suburban nation</a>. Half a century later, the moniker is perhaps truer than ever. We calculate that the <a href="https://books.google.com.au/books?id=eMYpDwAAQBAJ&amp;pg=PT119&amp;dq=Lucky+country+first+suburban+nation&amp;hl=en&amp;sa=X&amp;ved=0ahUKEwjB9Jmhw6_eAhVQEnAKHTOAAqwQ6AEIQDAE#v=onepage&amp;q=Lucky%20country%20first%20suburban%20nation&amp;f=false" target="_blank">five largest metro areas</a> now house 64% of Australia’s population. And the greatest population growth is in peri-urban fringe areas.
<a href="https://grattan.edu.au/news/most-new-housing-isnt-high-end-housing/" target="_blank">Most new housing is built in the suburbs</a>, and detached dwellings are a staple of the “Australian Dream” of home ownership. So it should come as no surprise that Australia’s <a href="http://www.abs.gov.au/ausstats/abs@.nsf/Latestproducts/3412.0Main%20Features42016-17" target="_blank">most rapidly growing ethnic group</a>, migrants born in mainland China, is choosing to settle in the suburbs.
<a href="https://onlinelibrary.wiley.com/doi/abs/10.1111/1745-5871.12293" target="_blank">Our research</a> finds that the residential patterns of China-born migrants in Australian capital cities are becoming both more diverse and more suburban.
Chinese migration to Australia dates back longer than the Commonwealth itself, with the first wave tied to the 19th-century <a href="https://sydneylivingmuseums.com.au/stories/chinese-goldfields" target="_blank">gold</a> <a href="https://cv.vic.gov.au/stories/immigrants-and-emigrants/many-roads-chinese-on-the-goldfields/" target="_blank">rushes</a>.
In the <a href="https://www.aph.gov.au/sitecore/content/Home/About_Parliament/Parliamentary_Departments/Parliamentary_Library/Publications_Archive/CIB/CIB9697/97cib16" target="_blank">1980s and 1990s</a>, ethnic Chinese from Hong Kong, Taiwan and the “Nanyang” countries of Southeast Asia (e.g. Singapore, Malaysia) came to Australia along with migrants from mostly southern mainland China.
Since 2000, Chinese migration to Australia has been more geographically diverse in its origins. These migrants have also been increasingly advantaged in socio-economic status and <a href="https://theconversation.com/what-we-know-about-why-chinese-students-come-to-australia-to-study-97257" target="_blank">often driven by tertiary education</a>.
Australia is now home to more than <a href="http://www.abs.gov.au/AUSSTATS/abs@.nsf/mediareleasesbytitle/D8CAE4F74B82D446CA258235000F2BDE?OpenDocument" target="_blank">1.2 million people of Chinese ancestry</a>, <a href="http://www.abs.gov.au/AUSSTATS/abs@.nsf/mediareleasesbytitle/D8CAE4F74B82D446CA258235000F2BDE?OpenDocument" target="_blank">41% of them born in mainland China</a>.
<h2>Diversity in dispersal patterns</h2>
Just like most Australians, these China-born migrants are concentrated in major cities. The Chinatowns in cities like <a href="https://theconversation.com/sydneys-chinatown-is-much-more-of-a-modern-bridge-to-asia-than-a-historic-enclave-94482" target="_blank">Sydney</a> and <a href="https://theconversation.com/friday-essay-the-story-of-fook-shing-colonial-victorias-chinese-detective-94017" target="_blank">Melbourne</a> remain as important cultural icons. Yet the reality is that, just like cities such as New York, Toronto and Vancouver, there has been an obvious trend of China-born migrants dispersing to live in the suburbs.
In our study covering the three census periods from 2001 to 2011, China-born residential patterns became more diverse over time. There has been greater dispersal in the large cities (Sydney, Melbourne and Brisbane) and clustering in medium and smaller cities (Adelaide, Perth, Hobart, Darwin and Canberra).
In other words, as the local population of China-born migrants gets larger and more complex, multiple Chinese enclaves emerge. These include Hurstville and Campsie in Sydney, Burwood and Clayton in Melbourne, and Sunnybank and Sunnybank Hills in Brisbane.
<a href="https://images.theconversation.com/files/243195/original/file-20181031-76405-30oc7e.jpg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=1000&amp;fit=clip"><img src="https://images.theconversation.com/files/243195/original/file-20181031-76405-30oc7e.jpg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt=""></a> Campsie is one of the Sydney suburbs popular with China-born migrants. <a class="source" href="https://www.shutterstock.com/image-photo/sydney-australia-apr-6-2018-vehicle-1094335619?src=7SEue2_X5ygQd-1mlyFrzg-1-0" target="_blank">Victor Wong/Shutterstock</a>
In the smaller capital cities of Adelaide, Hobart, Darwin and Canberra, residential clusters appear to emerge near major universities in inner cities. Here, housing markets and planning initiatives play a strong role as well. Clustering appears mostly in and around inner cities, which may be tied to the construction of high-rise unit blocks.
Interestingly, the diversity of this suburbanisation － particularly in Melbourne and Sydney － runs counter to the narrative of the “straight line” assimilation model. This is based on the idea that migrants and their children simply amalgamate into the population at large. Unlike what such “traditional” models predict, the integration of China-born migrants has been accompanied by concentration growing stronger over time, mainly in the outer suburbs, regardless of their socioeconomic status.
The association among residential improvement, individual advantages and entry into mixed White neighbourhoods may be weakening. This is reflected in the growing tendency towards living in Chinese-dominated communities with the benefits of easy access to Chinese-owned business and services. Formation of ethnic concentrations is voluntary, which runs counter to the idea that a lack of options forces migrants to segregate.
<h2>A new look for suburbia</h2>
With about <a href="http://www.abs.gov.au/ausstats/abs@.nsf/Latestproducts/2024.0Main%20Features22016" target="_blank">half of Australians</a> born overseas or having an overseas-born parent, migration has rendered Australia <a href="https://www.theguardian.com/australia-news/2017/jun/27/australia-reaches-tipping-point-with-quarter-of-population-born-overseas" target="_blank">one of the world’s most diverse countries</a>. While television shows such as Neighbours and Home and Away still <a href="https://www.tandfonline.com/doi/full/10.1080/07256868.2013.864628" target="_blank">depict suburbia as the preserve of the moneyed Anglo-Australians</a>, the composition of today’s suburbs mirrors the <a href="http://www.abs.gov.au/ausstats/abs@.nsf/Latestproducts/2024.0Main%20Features22016" target="_blank">diversity of the nation</a>. Just remember that next time you are trying to find a good acupuncturist!
<a href="https://theconversation.com/profiles/thomas-sigler-339478">Thomas Sigler</a>, Lecturer in Human Geography, <a href="http://theconversation.com/institutions/the-university-of-queensland-805" target="_blank">The University of Queensland</a>; <a href="https://theconversation.com/profiles/jonathan-corcoran-413910" target="_blank">Jonathan Corcoran</a>, Professor, School of Earth and Environmental Sciences, <a href="http://theconversation.com/institutions/the-university-of-queensland-805" target="_blank">The University of Queensland</a>; <a href="https://theconversation.com/profiles/siqin-sisi-wang-562255" target="_blank">Siqin (Sisi) Wang</a>, PhD and Research Assistant, School of Earth and Environmental Sciences, <a href="http://theconversation.com/institutions/the-university-of-queensland-805" target="_blank">The University of Queensland</a>, and <a href="https://theconversation.com/profiles/yan-liu-427762">Yan Liu</a>, Associate Professor, School of Earth and Environmental Sciences, <a href="http://theconversation.com/institutions/the-university-of-queensland-805" target="_blank">The University of Queensland</a>.
This article is republished from <a href="http://theconversation.com" target="_blank">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/where-are-chinese-migrants-choosing-to-settle-in-australia-look-to-the-suburbs-103920" target="_blank">original article</a>.
Main image photo credit: <a class="source" href="https://www.shutterstock.com/image-photo/aerial-view-typical-suburb-australia-641677402?src=VkZnqgoaYk6tWt7fljUTTA-1-2" target="_blank">Jandrie Lombard/Shutterstock</a>
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Where are Chinese migrants settling in Australia?

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EXPERT OBSERVATION
China’s response to growing trade tensions with the United States has been multi- faceted. China’s central government has proposed loosening policy restrictions on infrastructure investment – developments that are typically managed and funded at the local government level. 
The latter could be problematic, as China’s local government debt could be much larger than widely thought – an echo of earlier fears from early 2014.
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COMPLEXITY OF LOCAL GOVERNMENT DEBT MAKES IT HARD TO ASSESS
China’s local government debt levels are at best opaque. According to official data, the total debt of local governments – which comprise a broad range of authorities at provincial, city, county and village/town level – was RMB 18.3 trillion in September 2018, equivalent to around 21% of GDP. 
However, it is likely that this figure does not present the full picture of their debts – which are larger, more complex and risky.
CHINA’S BUDGET IMBALANCE
Local governments struggle to fund their spending.
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Following the 1994 Budget Law, which shifted much of the revenue generation from local governments to Beijing, local governments were forced to generate alternative sources of funding to meet their expenditure requirements. The local government share of fiscal revenue fell from 78% in 1993 to 44% in 1994. Prohibited by this law from issuing bonds or borrowing directly from financial institutions, they established local government financing vehicles (LGFVs) – which secured debt from banks, shadow banks and other sources.
The scale of this debt expanded rapidly in the post-GFC period, as China’s infrastructure program spared the country from the worst of the crisis.
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At the end of 2013, China’s National Audit Office released a detailed review of local government debt – highlighting the broader scale of these liabilities. In addition to the debts that local governments had direct obligations to repay (around RMB 10.9 trillion in mid-2013) – which matched the official debt statistics above – these authorities also had hidden debts (including those debts they guaranteed for LGFVs or public-private partnerships) – which totalled an additional RMB 7.0 trillion. However, this broader estimate of local government debt has not been updated since late 2014.
Fears around this debt largely dissipated since this period, in part because Beijing permitted provincial, municipal and some city governments the authority to issue bonds from mid-2014 (subject to annual caps). Ministry of Finance data suggests that bonds accounted for almost 90% of the reported total debt at the end of 2017. 
However, the bulk of bond purchasers have been banks – at the behest of the central government and regulators – with the returns on these bonds usually unattractive to other investors. Overall, the lower level of concern appears due to hidden debt being overlooked, rather than it being effectively addressed.
In late March 2018, the Chinese Academy of Social Sciences estimated that the total off-balance sheet liabilities of LGFVs was in the order of RMB 30 trillion, while a further RMB 10 trillion could be hidden within so-called public-private partnerships (where the “private” partner has often been a state-owned enterprise). 
A recent report by Standard and Poor’s produced a similar range for off-balance sheet debts. These estimates are relatively uncertain, since the sheer number and complexity of LGFV arrangements makes them difficult to track.
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OFF-BALANCE SHEET DEBT
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Growth largely overlooked since 2014
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Combining these estimates of off-balance sheet debts to the officially reported sums suggests that China’s local government debt could be in the range of 55% to 66% of GDP in September 2018. With another 16% of GDP in central government debt, this suggests that China’s total government debt is well above the 60% benchmark that is seen as a prudent limit in advanced economies. It is also above the IMF’s estimate of China’s total government debt – which was around 47% of GDP in 2017.
DEBT RISKS RISING IN CURRENT CLIMATE
A critical problem related to China’s local government debt is the capacity of these authorities to service these liabilities. The total fiscal revenue of local governments was just RMB 9.1 trillion in 2017 (less than one-fifth of the lower bound estimate of total debt).
 With limited ability to collect tax revenue (following the 1994 law change), many local governments have relied on land sales as a key source of income – averaging around 32% of the total in 2017 (behind central government transfers) – albeit the share differs widely across the country.
Land sales are not considered a sustainable long term of revenue, and a fall in sales could result in local governments defaulting on their debts or failing to support distressed LGFVs. This could flow into greater instability in China’s financial sector, particularly if central authorities follow through on public statements and do not provide a bail out.
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LOCAL GOVERNMENT REVENUE (2017)
Land sales contribute too much to funding
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Similarly, increasing infrastructure investment in the short term could mean a large expansion in local government debt, leading to higher interest payments even if revenue levels can be maintained. The mismatch between the short term maturity of many sources of local government debt – such as bank loans and shadow banking products – and longer term return on infrastructure investment leads to greater risk.
CONCLUSIONS
The greater scale of local government debt than is widely acknowledged in official figures highlights the risks associated with infrastructure led stimulus to China’s economy. It also highlights the need to continue reforms to the broader economy – where progress has been disappointing. A key reform that would boost the sustainability of local government revenues would be the implementation of property taxes – proposed for over a decade, but repeatedly delayed. A nationwide tax had been scheduled for introduction in 2019, however this proposal has been delayed with an uncertain start date.
GERARD BURG is senior economist - Asia Group Economics at National Australia Bank.
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Chinese local government debt fears are returning: NAB's Gerard Burg

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EXPERT OBSERVER
China has imposed retaliatory tariffs of between 15% and 25% on US$2.75 billion worth of US imports, including nuts, frozen pork and wine, in response to US import duties on aluminium and steel announced by the Trump administration.
The Australian nut industry, like many other primary industries, has been caught in the middle with collateral damage on this year’s crop as some sellers are no longer able to access this market.
The current trade war between China and the US may provide export opportunities for the Australian industry in the short term, provided that product from overseas is not dumped on the Australian market. In the mid-to longer-term, the industry will continue to develop stronger trade links with China to secure long term markets.
The impact on the US has resulted in additional tariffs of between 15% and 20% for their nut products entering China.
The China Australia Free Trade agreement tariffs of between 10% and 25% on Australian nuts will be completely phased out by January 2019.
China is a major buyer of Australian nuts with over $63 million in sales in 2015-16 (ABS) and solid increases in sales over the past two years.
Tree nuts are the country’s largest horticultural export forming over 50% of horticultural goods sold overseas.
China is the world’s second largest buyer of imported food after the US with over A$130 billion in 2016.
Australia is China’s sixth largest supplier of food with exports of A$5.3 billion and continued solid annual increases in double figures.
The macadamia industry is breaking into China’s growing demand for this nut with demand in 2017 at 50,000 tonnes in shell, or 26% of global demand or more than the entire Australian crop.
By 2020, about 24,000 hectares will be planted to macadamias with kernel production greater than 18,500 tonnes. Export value will exceed $280 million.
The pecan industry in the US is continuing to expand at all time high rates with record planting in southern US. Industry experts are saying plantings are sustainable, and that it will take another 30 years of planting to catch up with global demand.
The Australian industry is also seeing record plantings with new entrants into the market. The export market is chasing large nuts which is limiting the varieties planted. The area under pecans is 1,350 hectares. Production is about 3,000 tonnes in-shell (1,650 tonnes kernel).
The almond industry is forecast to harvest over 82,000 tonnes kernel weight this year which is slightly up on last year’s crop. Late season frosts have been a worry for many growers. Australia is the second largest producer of almonds in the world.
In 2015, the area under production was 31,115 hectares, producing a record crop of 82,509 tonnes.
The walnut industry is expecting a harvest of 13,000 tonnes in line with the previous year. This is a significant increase in production over 2016 of 6,000 tonnes in-shell, with a farm-gate value of $30 million and export value of $15 million.
Approximately 3,600 hectares of mature and developing trees were under cultivation in 2016. This number is expected to rise to more than 4,300 hectares by 2021 as current growers expand their orchards and new growers enter the industry in current and new regions.
Webster Limited is the largest walnut grower, owning or managing more than 3,100 hectares of orchards. When mature, these orchards are expected to produce over 18,000 tonnes in-shell per annum. The pistachio industry is expecting a harvest of 2,300 tonnes which will be a record for the industry. The area under production was 950 hectares in 2015.
Chestnuts have had good growing conditions with a crop of 1,300 tonnes expected which is in line with previous years. In 2016, chestnut production was valued at $8.5 million (LVP). In 2016 there were around 1,300 hectares containing approximately 200,000 chestnut trees. The industry estimates that with more trees planted, production will rise to approximately $9.8 million by 2020. The industry is primarily focused on the domestic market with approximately two% exported, mainly to Asian markets.
Hazelnuts have had a mixed growing season with yields of 210 tonnes expected. In 2016, hazelnut production was valued at $1.7 million (LVP). The industry is set for continued expansion with approximately 200 hectares planted, consisting of around 100,000 trees. The industry estimates hazelnut production in 2021 will be 2,550 tonnes with a value of $22.5 million. The area under production is about 1,400 hectares, including young orchards yet to come into commercial bearing.
New areas of hazelnut plantings have extended into southern New South Wales, eastern Victoria and throughout wider regions of Tasmania.
The Australian nut industry has increased revenue by 250% over the past five years and is predicted to exceed $2 billion by 2030 based on new planting and productivity research investment. The table shown is a summary of the Australian nut industry.
The long-term outlook for the industry is of continued growth with new plantings across all nut types at all-time highs. The increase in research and development dollars from industry and government is assisting in productivity gains and new marketing initiatives are targeting value adding to the raw nut product.
The industry is proactive in improved integrated orchard management techniques which are targeting canopy health, drainage and moisture conservation and plant health.
Established growers are continuing to expand their plantings and new entrants bring scales of economy to the industry.
David Nilon is a Director of Herron Todd White. 
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China-US tariff war impacts Australian nut industry: HTW's David Nilon

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Momentum in China’s housing market has continued to build in recent months. At June, 84% of the 70 cities surveyed were reporting monthly price gains – the strongest outcome since August 2016. At 90%, gains for the established market were broader still – a high back to April 2013.
While the breadth of gains is striking, their quantum remains relatively subdued compared to heights reached in 2015 and 2016.
For new housing, prices in tier 2 are currently up 6.6%yr, while in tier 3 they have risen 6.0%yr. Tier 1 house prices are, in contrast, broadly in line with their year ago levels after annual growth troughed at –1.0% in April.   
For existing housing, very similar outcomes have been seen: prices in tier 1 are unchanged; and in tier 2 and tier 3, they are up 6.3%yr and 3.8%yr respectively.
Taking a look at the monthly growth pulse for new housing, it is evident that momentum is picking up. Average growth has lifted from –0.1% in January to 0.3% in June; while the maximum gain has jumped from 1.2% to 3.3%. 
Authorities are less likely to react to accelerating price growth in this instance given it is being seen in tier 2 and 3, where construction activity and wealth gains are desired, and because (in a macro sense) strength in residential construction is currently necessary to offset weakness in other key sectors – namely utilities and transport.
Growth in housing starts has accelerated ahead of sales, so it is right to expect construction momentum to hold up in the second half of 2018.
That being said, if the pace of sales does not follow, then construction activity growth will again fall back as inventory is worked through.
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/8/17/china%201.jpg" alt="">
If authorities decide that a further easing of financing conditions is needed, it will come via another cut to the Reserve Requirement Ratio (we forecast 100bps by year end) and the provision of additional liquidity to interbank markets. By and large, region-specific mortgage restrictions will remain in place.  
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/8/17/china%202.jpg" alt="">
Elliot Clarke is a senior economist at Westpac and can be <a href="https://www.westpac.com.au/news/authors/elliot-clarke/" target="_blank">contacted here.</a>
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Perspective on Asia, China housing update July 2018: Elliot Clarke

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The Chinese apartment developer HPG, a subsidiary of Chinese conglomerate Hailiang, has declined to deny a report the Chinese government has sought the divestiture of its One Sydney Park project.
It is a slow selling 400-apartment project spanning 2.1 hectares in Erskineville, six kilometres from the Sydney CBD.
<img src="https://www.urban.com.au/images/2018/8/16/Interior%20HPG%202.JPG" alt="">
Chinese companies have been told to relinquish investments outside China, to strengthen its economy as the trade war with the US escalates, the Australian Financial Review advised.
It reported HPG had been "shopping quietly off-market for a partner or a buyer" for its $600 million flagship apartment project, One Sydney Park.
HPG acquired the former Goodman Group industrial site in 2015.
There have been around 50 sales so far at the 205-213 Euston Road site. will end its presence in Australia, which started in 2014.
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<div>HPG declined to comment.</div>
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<div>The paper speculated the Chinese government was tightening up its capital reserves to cushion potential blows to the Chinese economy.</div>
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<div>It follows an earlier round of capital recall in 2017 when Beijing sought an end of powerful Chinese conglomerates including Dalian Wanda with their debt-laden international spending spree.
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<div>HPG reportedly sold about 50 of the 100-unit first stage launch of One Sydney Park in February this year.</div>
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<div><img src="https://www.urban.com.au/images/2018/8/16/Interior%20HPG%203.JPG" alt=""></div>
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<div>Nearly all the buyers of the project's apartments were intending owner occupiers.</div>
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HPG told to divest One Sydney Park: report

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GUEST OBSERVATION
July 1 marked the 80th anniversary of Australia’s iron ore embargo against Japan. The official reason was resource conservation, but the ban was really driven by a fear of Japan – which had been buying up assets like iron ore and scrap metal – gaining a stronghold in Australia that threatened our sovereignty and security.
Despite the passing of 80 years, Australia is having the same discussions we had back in 1938, only this time about China.
China’s growing commercial influence in Australia and other Asia-Pacific countries has sparked concerns about its political ambitions. Responding to these concerns with economic sanctions is likely only to pander to US desires to curb Chinese influence, placing Australia’s economic future and regional security at risk.
The economic sanctions Japan faced in the 1930s and early 1940s contributed in large part to the outbreak of the Pacific War.
With the recent tit-for-tat US and Chinese trade restrictions, is the world heading down a similar path?
What can we do differently this time around?
Australia must recast its foreign policy with a view to the role it wishes to play in its immediate region. This needs to be a little more adventurous than the 2017 Foreign Policy White Paper.
The Australia of the 1930s faced a region in flux. There were territorial disputes, the waning power of Britain – Australia’s primary ally and protector – and the growing military and commercial weight of regional power Japan, whose intentions remained unclear. Sound familiar?
In early 1937, fears emerged of a world steel shortage. While iron ore restrictions were being introduced elsewhere, the Australian government maintained that it was not a lack of resources that had created a shortage but an inadequate output.
It came as quite a surprise then, in May 1938, when the Australian government announced an embargo on iron ore exports, effective July 1 1938. The government cited a (then) recent and very brief report, compiled by the Commonwealth government geological adviser, which concluded iron ore deposits were much smaller than had been estimated and perhaps would not meet domestic needs.
The embargo included existing agreements with foreign investors, such as the Japanese lease at the Yampi Sound mines in Western Australia, where preparations for the first iron ore extraction were well under way.
The government stressed that the embargo was not due to anti-Japanese sentiment. Nevertheless, this was the conclusion the Japanese government drew as it tried and failed to secure access to the Yampi Sound project.
The size of Australia’s current iron ore exports calls into question the logic of this report and the export ban it led to.
A foreign foothold in Australian territory
Throughout the 1930s, Japan pursued a policy of southward expansion, both territorial and economic in nature. At the centre of this policy was the need for resources to cater for Japan’s rapidly growing population. This involved the “economic penetration” of Far Eastern nations, investing Japanese capital to secure essential goods.
Australia, still recovering from the Great Depression, welcomed these investments.
<img src="https://images.theconversation.com/files/223755/original/file-20180619-126534-53upal.JPG?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt="">
‘Construct new Japan as Below’. Legend reads: Industrial Centre, Immigration Spheres, Expansion Spheres for White Races, Trade Expansion Spheres, Investment Expansion Spheres. From the Collection of the National Archives of Australia, A601, 402/17/30.
Japan’s visions for territorial expansions became clear in July 1937. Japan – as Australia had long feared – proved itself an aggressor when its army invaded China, signalling the start of the Second Sino-Japanese War.
Australia opted for a diplomatic response to this conflict, remaining impartial and encouraging “cooperation and conciliation” as the solution.
However, Japanese economic investments were being viewed with increasing caution.
Australia’s trade commissioner in Tokyo, Eric E. Longfield Lloyd, reported that Japan’s territorial expansion into China had been aided by a seemingly innocent system of economic penetration throughout the 1920s and ’30s. He feared that allowing the Yampi Sound project to continue, operated as it was by Japanese staff, would result in a “foreign foothold” in Australian territory.
<img src="https://images.theconversation.com/files/225423/original/file-20180629-117377-1iiilnu.JPG?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt="">
From the collections of the National Archives of Australia, A601, 402/17/30.
Longfield Lloyd pressed for the project’s cancellation “by any means whatsoever”. One proposal was was an export embargo “by declaration of insufficiency”.
Here was the origin of the 1938 iron ore embargo.
Chequebook diplomacy
Much like in 1938, today’s fears about Chinese investments hinge on the question of political influence and security implications.
These concern have led to the limiting of property investments and the banning of foreign political donations.
Further afield, China’s vast infrastructure program, the Belt and Road Initiative, has sparked speculation that the nation is using chequebook diplomacy – and perhaps debt-book diplomacy – to secure economic leverage and gain greater influence in regional and global affairs.
This is of particular concern in Australia’s immediate sphere of influence, Southeast Asia and the South Pacific.
Most recently, the Australian government sought to protect its diplomatic and security interests when it outbid the Chinese telecom giant Huawei for the rights to construct a network of internet cables linking the Solomon Islands to Sydney.
Time for a long-range view of Australia and its foreign policy
The economic pressure exerted on Japan in the 1930s and early 1940s – in which Australia was by no means alone, with the US and Britain leading the charge – deprived the nation of its means of survival. This hastened the campaign of aggressive regional conquest in pursuit of raw materials that eventually led to Pacific War.
To be sure, China’s current economic position makes it unlikely that trade sanctions will lead to armed conflict. But throw in territorial disputes, erratic leadership, the US-China struggle for Pacific dominance, and the future seems a lot less certain.
With all this in mind, the 1938 iron ore embargo does serve as a warning against over-reliance and a blinkered outlook that sees only potential dangers in our immediate region.
Now is the time for Australian to broaden its foreign relations, avoiding the potential downfall of over-reliance on the Chinese market and the US alliance, while building new diplomatic ties.
There is such an opportunity in Australia’s neighbourhood, “that part of the world”, as shadow defence minister Richard Marles recently argued: “in which our influence matters the greatest. What we say and do in the Pacific carries enormous weight.”
Australia must take the initiative in its immediate region to develop varied and mutually beneficial economic, diplomatic and strategic relationships.
<img src="https://counter.theconversation.com/content/98387/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1">In this way, Australia can strengthen its own economy, the economies nearby and its role as a regional leader and collaborator.
Honae Cuffe, PhD Candidate, History, University of Newcastle
This article was originally published on <a href="http://theconversation.com" target="_blank">The Conversation</a>. Read the <a href="https://theconversation.com/fears-about-chinas-influence-are-a-rerun-of-attitudes-to-japan-80-years-ago-98387" target="_blank">original article</a>.
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