HSBC Canada’s chief economist says Ottawa and B.C. need to be clear in their dealings with investments from China, citing the province’s recent tax on foreign homebuyers as evidence of a mentality that could hurt the Canadian economy.
David Watt, speaking at HSBC’s China Forum in downtown Vancouver on Wednesday, told attending business and trade officials that the new tax — similar to Ottawa’s ruling that restricted Chinese state-owned enterprises from entering Alberta’s oil patch in 2012 — could be sending the wrong message for a slow-growing economy whose best chance at growth falls on trade links to markets like China.
This is what I would refer to as nonsense. Please have a read of this article. It’s the tail wagging the dog. Canada has a responsibility to ensure a quality lifestyle for its citizens first. It has every right and in fact, every obligation to protect its citizens from the flow of “hot money”. The capital flows with respect to housing having nothing to do with the matters discussed:
She also noted that China is now increasingly looking to expand in three areas where Canadian businesses can benefit: consumer service, sustainable technology through urbanization, and high-tech/high-value manufacturing.
Unfortunately, or domestic economic policy of encouraging the importation of cheap goods and moving our manufacturing jobs outside of Canada are all chickens that have come back to roost. Chinese “lazy capital” is now looking for a home.
The flow of capital that affecting our domestic housing prices is capital entering Canada from private individuals, not corporate long-term investors. The reasons for this are clear. Affluent private investors are looking for “safe havens” for their capital. As such, housing prices are not an issue, foreign exchange movements are not an issue. Security of capital is an issue. So please, would the folks at HSBC Canada stop promoting their own agenda and look at the broader picture.
Until the politicians come to grip with this issue, that Chinese individuals are looking for the security for themselves and their money, there is no solution to all this.