New Chinese restrictions on overseas investment could be a boon for our film, agriculture and tech industries, even as the new rules take some wind out of the local property market.
China’s National Development and Reform Commission last week issued a list of ‘banned’, ‘restricted’ and ‘encouraged’ investments.
Overseas property investment including commercial, residential, hotels and theme parks is now restricted, along with the equity investment funds that Chinese property speculators may have eyed as a vehicle for bundling up individual property investments and flipping them to Chinese punters.
China is worried that property investment is not the real economy and wants to encourage money going into infrastructure that supports its ‘Belt and Road’ strategy, as well as food security.
Offshore gambling and sex industries have scored an outright investment ban by the Chinese government.
The foreign investment crackdown comes in the wake of a global buying spree from Chinese investors that has seen them whack money into everything from trophy hotels to US film producers to English football clubs.
David Chin, the managing director of China focussed business intelligence firm Basis Point sees opportunities ahead for Australian businesses that could benefit from the Chinese capital outflow crackdown.
Mr Chin believes Chinese and Australian investors with a long-term view will benefit as speculative asset buyers exit from restricted investments, leading to more sustainable asset values.
“Is there opportunity? Yes, but it’s not about money that was going into property flowing into tech,” Mr China said. “Its more the Chinese government encouraging investment around ‘Belt and Road’.
“If there was an Australian startup or technology that could help build infrastructure better, then there would be a strong interest from China.”
Similarly, local agribusiness efforts that could add to Chinese food security could also get a guernsey from Chinese investors.
“Anything that promotes food security would attract interest such as using drones to better monitor crops and cattle,” says Mr Chin.
Australian medical technology and services is another potentially juicy area for more Chinese investment.
He sees China’s new middle class having creating strong demand for healthcare related technology and expertise, especially as it ages.
Solar and wind power generation and technology that improves water security are also on the Chinese investment map.
The latest restrictions dampen Chinese investment in foreign entertainment, but encourage money going into culture-linked investments which is where Mr Chin sees an opportunity for the Australian film industry.
A bout of soul searching in China after the country’s vast and rapid uptick in wealth is leading to a greater appetite for film narrative that explores meaning in life and societal connections, Mr Chin says.
“This soul-searching plays into Australia’s cultural and creative strengths, especially for the Australian film industry,” he says.
He points to the success of heart-warming films such as Dangal (named “Lets wrestle Dad” in China) and Paths of the Soul which is about a Tibetan pilgrimage.
“The Chinese film industry is emerging and still has a long way to go in terms of storytelling expertise and sophistication.” Mr Chin’s Basis Point will host the Aus-China Film Investment Conference in Sydney next month.
The patriotic movie Wolf Warrior is the first Chinese film to move into the global top 100 list.
“This is just the start, there’s a lot of learning to go.”
While the signs are there for a boom in Chinese movie making, the country is going to need help in if it wants its productions to attract a global market.
Australian expertise in script writing and movie production skills could be in high demand from Chinese movie houses.
Mr Chin says that China wants to tell its historical stories in a way that appeals to the Western market.
“Now that China is larger in the economic sphere they want to tell their side of the story,” says Mr Chin.