My Ping Pong Pang series predicted a United States led resurgence supported by German led Europe. I retain that view.
What of the Pang in this economic triumvirate - China? There has been some less than encouraging news out of China. Predictions of a "looming credit crisis" & "60-70% chance that the Chinese government will need to bail out the banks in three years" (Australian Financial Review March 20th) do not make for confidence in capital markets.
Such uncertainty can have major impacts on the business plans of Australian and international entrepreneurs. There is a conference shortly in Sydney which seeks to capture inward Chinese investment. In the short run, we may see a flood of it, especially into higher end real estate. In the longer term (should these predictions be correct), it could stop. Capital flows from China are likely to be increasingly volatile as a result.
Nonetheless, there is a growing consumer market, even though the Chinese population is forecast to peak around 2015.
My view if we want to tap it is to find cashed up US and German companies which have the infrastructure and capital to implement and the patience to build a business over the long haul. The piggyback strategy. Australian bulk commodities and volume wine merchants already have this infrastructure but based on large international companies. Its very risky for a small entrepreneurial company with limited capital. There are safer fish to catch.
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