China's outlook on our property

The mining boom in 2013 was shaping the Australian economy at all levels, and its influence was felt everywhere. Of course the mining boom is bigger than just China. You can add India and the rest
of emerging Asia to the mix. But it's a good barometer of how things are tracking.

Things in China are looking a lot better than they were 6 months ago. Coming into 2012, the Chinese authorities were worried that the Chinese economy was over-heating. There were imbalances forming in the property and financial markets, and inflation was threatening to take off. So they tried to take some heat out of the economy and it worked too well.

Underestimating the headwinds coming out of the global economy, the Chinese economy came close to stalling. Australia watched nervously, worried that the demand that had kept the mining boom steaming along might suddenly evaporate.

Chinese authorities put their foot back on the accelerator, and at the beginning of 2013, China seems to have solid momentum behind it. The accelerator is infrastructure spending. China has announced a new round of massive investment in subways, airports and other 'mega-projects'. According to HSBC, investment is adding more to the economy now than at any time since 2009 - when China was doing everything it could to avoid the fall-out of the GFC.

And so at the end of 2012, exports were stronger than expected, credit was surging, and retail sales were improving. Industrial production was also stronger as was electricity output. As a result, economists were revising up their estimates of growth through 2012, to just under 8 percent. China looks like it's back on track. This is good news for Australia. The emphasis on infrastructure spending is particularly
good news for the mining industry. Steel demand seems likely to hold at stellar levels.

And the rapid urbanisation underway in China isn't letting up anytime soon. China will add another 100 million people to its urban centres by 2020, bringing the urbanisation rate up to 60 percent. The long-term drivers are solid. And it seems that in the short-term as well, through 2013 and beyond, China is on the right track. It looks like this year, Australian property investors can rely on China.