That’s according to CT Johnson, managing director of China research company Cross Border Management.
He told Mortgage Business that legislating to limit foreign investment in both residential and commercial sectors was a pointless exercise, explaining: “China's GDP is about ten times larger than our GDP here in Australia and it's growing at about three times the rate than we're growing here in Australia, so that significant economic weight is just going to continue to grow and you're going to have more and more attention [from investors in China].
“So, unless we're talking about a North Korea-style hermit kingdom, keep-everybody-out type of policy, it [legislating to limit foreign investment] is only going to slow things down in the short run and it will only have a very small impact in the long run.”
On Monday, the federal government introduced draft legislation to place increased restrictions on the tax exemptions available to foreign residents and their properties, as reported on Mortgage Business sister title, Smart Property Investment. This comes off the back of the 2017-18 federal budget, which tightened up the capital gains tax on foreign investors.
However, Mr Johnson said there are “lots” of projects that would not have been built without Chinese investment.
“Although frequently people get upset about the fact that a large proportion of new units that are off the plan will end up going to Chinese investors, at the end of the day, it's a net positive in terms of the number of dwellings that we have.”
Further, he argued that the Australian economy would be better served by building strong ties with China and subsequently enjoy the economic benefits as the Chinese economy booms.
“It's the world's biggest market, up there – so anything we can do to have a preferential access to that because of tighter economic relations or investor relations is just a fantastic thing for Aussies that have something to sell.”