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Last week the Australian Financial Review ran a short story about China's plans to build 5.2 million flats and offer housing subsidies to help accommodate 7.5 million low-income families by 2011. Some 380,000 new low-cost homes were started in China last quarter alone. This spells great news for Australia and especially for our resources industry (and resource-rich states like Queensland), assuming there is steel and concrete involved.
The numbers in China are mind blowing - within the next decade they will need to build 40 million square metres of new housing and at the same time rebuild another 40 million square metres of existing homes – their building standards are not as high as ours! By way of comparison, we need to build about 180,000 new homes per annum and despite the lowest interest rates in more than half a century and a $57 billion fiscal stimulus package, we cannot get anywhere near that result. Hell, the federal government won't even be able to build 20,000 new low income dwellings by the end of 2010! Let’s hope that China can do better than us. We need them to.
The reason we achieved a surprise positive March qtr GDP figure was because of a big fall in imports (we spent less than usual) and booming exports, thanks to China! The GDP figures show that Aussie businesses are cutting back expenditure and investment, which suggest harder economic times ahead. In simple terms, no investment means no jobs. What happens in China now becomes absolutely critical. Rudd's earlier mantra, "Go early. Go hard. Go households," now needs to be replaced with "Go China. Go hard. Go now.” Fingers crossed.
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