Bernard Hickey says capital flows from China into NZ are still only a trickle. The relaxation of capital controls in China and arrival of Chinese banks may turn this into a flood

Bernard Hickey says capital flows from China into NZ are still only a trickle. The relaxation of capital controls in China and arrival of Chinese banks may turn this into a flood

By Bernard Hickey

We ain't seen nuthin' yet.

The revelation that Shanghai Pengxin is buying Lochinver Station should not be a surprise to anyone watching the capital flows coming out of China in the last couple of years.

It is only the beginning and the scale of the flows will dwarf the NZ$300 million plus that Shanghai Pengxin's property development billionaire owner Jiang Zhaobai has spent over the last three years building a portfolio of dairy and dairy support farms in New Zealand.

Along with the 13,800ha Lochinver, he has bought 74% of Synlait Farms' 13 farms over 3,900 ha in Mid-Canterbury and the 16 Crafar Farms over 8000 ha in the central North Island, including some that are next door to Lochinver.

Collectively they now supply 10 million kilograms of milk solids each year to Fonterra, Synlait and Miraka.

Mr Jiang is not unusual in China.

Like many savvy entrepreneurs who have made fortunes out of the boom in property development in China in the last decade, he is looking for other business opportunities that allow him to both diversity his investments and take advantage of the biggest boom in demand for goods and services seen in the history of the word -- from China's middle classes New Zealanders debating their foreign ownership laws should understand the scale of the capital flows that are coming and where they come from. 

We should also understand we are not alone.

Owners of luxury property, mines and farms globally face the same pressures, opportunities and threats.

The first thing to know is that there is a wall of cash about to break out around the wall from inside China.

Over the last five years China's state-owned banks and a swathe of property-lending finance companies lent more than US$14 trillion to property developers and business owners. The scale is enormous.

That is more lending in five years than was lent by America's banking system in almost 200 years.

That money is still circulating inside China and many believe it is bursting to get out, especially now that property prices are starting to cool.

An estimated US$500 billion has been invested by Chinese-owned companies and individuals in land, companies, mines and farms in the rest of the world over the last five years.

At least another US$1.3 trillion is expected to be poured into buying property and other assets over the next decade under the current levels of capital controls that make it very difficult to move money out of China.

This is the key point.

China's new leadership under President Xi Jingping wants to relax those capital controls to remove some of the distortions in China's economy and impose some market disciplines.

This will make it easier for some of that US$14 trillion to get out and buy assets beyond China's borders.

China's state-owned banks are in the first vanguard of facilitating these outward capital flows.

State-owned China Construction Bank, chaired in New Zealand by Jenny Shipley, was registered as a New Zealand bank earlier this year, while Industrial and Commercial Bank of China, chaired here by Don Brash, was registered as a New Zealand bank last year.

Bank of China has taken out a lease on property on the top floor of 205 Queen St and is expected to also gain a license here.

China's banking scene was rocked by an investigation last month by the state-run CCTV network of a money laundering scheme involving Bank of China, which offered help to wealthy individuals to move funds to Australia through its Significant Investor programme -- similar to New Zealand's Investor Plus programme.

The episode highlighted the scale of the funds that could flow out of China once the taps are opened.

It also raises questions about the source and legitimacy of the funds.

Research and advocacy group Global Financial Integrity has estimated that China lost USUS3.8 trillion in illicit capital outflows between 2000 and 2011. No one is suggesting that is the case with Shanghai Pengxin, which is operating in public and in partnership with the likes of Landcorp and the Maori-owned Miraka.

But the source of these capital funds is one anti-money laundering banking regulators in both China and New Zealand will be keeping a close eye.

Prime Minister John Key has signalled he would revisit the issue of limits on foreign buying of land if there was a "run" of such buying.

Regardless of the election result, he may not have to wait long, and then the tough questions will have to be answered.

Will these capital flows further pump up an already over-valued currency?

Are the capital flows likely to be sticky?

Or will they be as temporary as the Japanese buy-ups of land in America in the 1980s?

Are the New Zealand sellers able to recycle the capital flowing into New Zealand into other more productive assets, as the seller of Lochinver is hoping to do?

The debate will not go away because the capital floods out of China are heading for mines and farms and other assets all around the world.

--------------------------------------------

A version of this article was first published in the Herald on Sunday. It is here with permission.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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This is good news indeed , Bernard ! .... just as the dairy industry is heading down , the gullible Chinese are rushing in to bail us out of our way overpriced farms and factories ...
 
... allowing us to do more useful things with that moola , 'like the plan Steven's group has to develop an industrial hub in Drury , potentially creating 8000 new jobs ...
 
Excellent news , thankyou Bernard , you are beginning to walk along the enlightened side of economic life , at last , welcome to the sunshine old friend !

Which of course is not going to be the case at all. Stevenson's industrial hub will be no different to any other, built to advantage them just as the Chinese govt backed buy ups of our land will be done to advantage China.

Spanning 220ha, the development will take 15 years and is expected to create more than 8000 jobs. It will include warehouses, factories and other commercial/industrial buildings on the 360ha property.
The project began as a way of providing an industrial buffer around the quarry’s traffic routes but Franklin said he also believed Auckland’s industry would increasingly move south.  
‘‘I’d imagine that this is going to be the next generation of growth in Auckland.
‘‘I mean, Pukekohe’s going to be a satellite city of Auckland and that’s going to have another 50,000 people there.
‘‘Waikato is moving up towards Auckland, you’ve got the Pokeno subdivision now. Pokeno is on the other side of the Bombays, so that’s another 5km out from Drury.’’ 
Franklin said Drury was also attractive as a distribution hub because of its central position within the ‘‘golden triangle’’ of Hamilton, Auckland and Tauranga. He had also been fielding calls from people interested in housing developments there.
....
So it is about population growth it isn't about tradeables?

GBH.....   You must be looking into some kind of Magic crystal Ball to be able to paint that picture..
Any chance u were a preacher in a past life..??
you are beginning to walk along the enlightened side of economic life , at last , welcome
I've been watching foriegn Direct Investment for the last 30 yrs...   and I stiill question whether it actually creates new investment...new employment... new wealth    on balance.
Last time I looked.( a while ago )... our current Acct comprised  of $4 billion in repatriated earnings to offshore owners of NZ assets.....    I dont see how that adds to NZs overall wealth....  or adds to new jobs... money flowing within an economy creating new businesses..new jobs....etc
GBH...   I'm not saying u are wrong....   just saying u are making a truckload of assumptions in arriving at your effervescent.... praise the lord.. senario.....   
How on earth an industrial development creates 8000 new jobs  has me scratching my head..??
U say gullibe Chinese...   I'm guessing they have a better grip on a likely future than we might..   ie.. they are smart  and could not care less about short term , market fluctuations.
In my view..... in a macro sense, historically,  swapping blankets for land has never been a good play....  just study history.. ( blankets for land is my metaphor for exchanging hard assets for soft ( financial ) assets )  .........I think most people intuitively agree with that.

... it's private businesses who are selling these assets , not the government , so it's unlikely that the proceeds will be wasted directly , as a government department with a windfall would quickly do ....
 
And secondly , you're forgetting that many Kiwi businesses and individuals have assets overseas , and draw profits back to Godzone from these .... it is not a one way street , these flows of dividends ...
 
... we live in one world ... the strands of commerce link us all together ... and isn't it gratifying to see our Lord of Darkness , Bernard Hickey , coming out into the light at last ... Praise Be !!!
 

We live on one planet but we most certainly do NOT live in one world. 
We have China where no-one can own land and we have NZ where anyone from anywhere can
We have Scandinavia where a person is free to worship whoever they choose and we have Iraq where currently people are stranded on a mountain with forces advancing on them will behead them if they do not convert to Islam
We have people all around the world who are concerned at the disappearance of wild spaces and wild things and we have others who we are still trying to convince that they need to stop trading in ivory
Those are just a few examples that I can come up with that demonstrate that we clearly do not live in one world

Agree totally
 
From all of the currect talk on the land ownership subject - much of which comes from 'experts' - I am not assured that I actually own any of the land that I 'own'.
 
But I do instead hold TITLE to those land parcels.  These titles only valid as long as we have stable lawmakers. Used to be a piece of paper. Now just a digital blip
 
Correct me if I am wrong

China must sell us their land too or no deal!

Big business use of tax havens to conceal

Two simple steps that should be mandatory requirements are
(a) Any organisation that has affilliations with a Tax Haven should pay a witholding tax on gross earnings, and
(b) Publication of 6 monthly audited reports of their NZ operations showing how much NZ tax they paid
(c) How many local people they employ
 
This week, courtesy of Henry Tull,
it was revealed Shanghai Pengxin has an entity in the British Virgin Islands (BVI)
That's only one that we know of
 
More ....
Michael West Sept 9 2013
Why does BHP have offices in the Swiss town Zug?
Why did the Commonwealth Bank make such a handsome profit in Malta?
 
Why does Macquarie control 49 entities registered in the Cayman Islands, 18 in Bermuda, nine in Mauritius, six in the Isle of Jersey, four in the British Virgin Islands, two in Aruba and one apiece in the Dominican Republic, Isle of Man, Curacao and the Netherland Antilles?
 
Is it that the bank has diversified its island operations between the Caribbean Sea, the Indian Ocean and the English Channel in case there is a tsunami? No, this significant island presence is complemented by 14 entities in Luxembourg, 58 in Ireland and four in landlocked Switzerland.
 
What all these places have in common is that they are tax havens. And the reason companies, funds and trusts are registered in such exotic locations is that they have something to hide. Most often, but not always, that something is profits. It would do no good, for instance, for this reporter to inquire why Macquarie's Caliburn Greater China Fund Segregated Portfolio (a sub-fund of Caliburn Absolute Strategies SPC) is domiciled in the Cayman Islands

Google - which shifts its profits offshore to low-tax jurisdictions - is a worse offender on aggressive tax plays than Macquarie or Newscorp. Has Ireland benefitted from Google's use of it as a tax haven - Has Ireland recovered from the GFC better than any other country?
 
As one of the finest tax brains in the country chuckled in the aftermath of the story: ''It's a 'zero leakage' structure, as we call it in the tax trade''!
http://www.theage.com.au/business/banks-use-tax-havens-to-conceal-20130908-2te1u.html

its the level above, the supply chain and govt industry policy that has enabled dairy industry (one buyer and one seller country wise)
Unfortunately, though, Shanghai Pengxin's purchase of Lochinver Station would be an economic negative for the country, if the government approved the deal.
http://www.stuff.co.nz/business/opinion-analysis/10363727/No-big-bucks-from-foreign-ownership-of-NZ-farms
and as we suggest put the highly geared and very French Danone as well in the mix as well.
 
Otherwise we see dairy industry going the way it is in Oz.
Its not like mining. We don't buy the "see all Ok as look at Oz resources mined by owners from everywhere" - the resources are different by the royalties taken.
 

Agree it is all about long view versus short view. If your pockets are stuffed full of devaluing fiat currency, buying productive physical assets has got to be the winning strategy long term. Especially true of food production assets needed for the coming billions. Selling those assets and stuffing your pockets with paper or your portfolio with digits is at best more of a personal tactical win unless of course your strategy is to purchase even more productive assets - but where and how? There's only so much family silver but electronic fiat money is limitless.

"Especially true of food production assets needed for the coming billions." and sadly once all that big money has been placed into that food production it is then in their interests to see to it that we do indeed, continue to breed like rabbits.
The thing we really have to do is start organising ourselves for a falling population that the planet so desperately needs, we cannot actually afford for our numbers to rise to 10 billion, in fact, we need to figure out how to thrive while we re-adjust downward to about 3 or 4

Agree, more costco's we dont need.
regards

Seen it all before the Japanese in the 80's early 90's went out bought the world only to sell it few years later Bernard just stirring again.

Bernard is paid to stir .... not unlike Kim Dotcom whipping up a fervour amongst drunken teenagers , Bernie is stirring up the xenophobes and racists into a lather .... his employers ( NZ Herald in this instance ) love him for beating up a maelstrom out of a zephyr ...
 
.... foreign money is being put to good use in this country , building businesses , innovating , employing locals , strengthening trading links with offshore entities ...

It's a circular whirlpool
Guess what Stevenson's core business is
The coming building and construction boom

... never seen a whirlpool that wasn't circular !!!
 
Stevenson's are hoping to attract more industry away from Auckland , and out to their Drury industrial park ( 250 hectare development ) ...
 
... doesn't that free up closer in land for residential development ? .... Win/win methinks ...

Stevenson's are hoping to attract more industry away from Auckland
 
So it is not 8,000 new jobs - just a transfer of them from Auckland?

... the industrial park won't construct itself out of thin air , no one has a 3-D printer that big !

A "whirlpool" is also a washing machine used for "laundering" things

Except that the Chinese are doing it for food security, not just plain straight out business, which suggests to me this will be a much much longer game they are playing, they food security without having to rely on their own polluted land or rely on other countries other than to use their land.
 
 

The Chinese actually export food , lots of it .... just not dairy .... but mountains of fruit and vege ...
 
... think you'll find they could be food self sufficient if they chose to be ...

For many years the reason for 1950's invasion of Tibet was a mystery.
 
"but mountains of fruit and vege" 
 
Thanks to the huge volumes of Himilayan water that has its origins in Tibet.

Yeah. Must be really nice to eat.

Human Waste Used by 200 Million Farmers, Study Says
http://news.nationalgeographic.com/news/2008/08/080821-human-waste.html

China has 0.08 arable hectres per person compared to the world average of 0.20, that's not to mention that 1/5th of their arable land is polluted with heavy metals.

China is securing resources for their country first and foremost. I cannot believe that neolibs think selling off our productive land is somehow going to advantage New Zealanders. The next generation of Kiwi's are going to be much worse off for this.

Yup, securing the good stuff for themselves while we will have nothing but polluted and irradiated stuff.
Look at NZ garlic for a kicker.
 

I have reached the conclusion that neo-libs have to squint to see all the way to the end of their noses

Gummy - as I understand it the Chinese have a stated goal to be self sufficient in their three main staples (maize, rice and wheat), but currently there are many questioning whether they will be able to achieve that. With that growing middle class it is a real test of them to achieve that but it is apparent that they will have to import a lot of food outside of that even if they can manage the three staples. I would under-estimate them on that but they have land and water problems that are extremely difficult to overcome and importing food is a cheap option outside of the staples.

Japan's population 120million China 120,000,000,000 ( a thousand to one). What's more Japan is developed.
China looks forward to loss of farmland and melting glaciers.

Ehhh, 10:1?

I wonder if the arrival of the 3 China State Sponsored banks will provide competition for the Australian banks
 
Considering they have a golden opportunity to under-cut and take serious market share off the AU banks the interest rates settings advertised the other day weren't exactly competitive.
 
Time will tell

Yup Iconoclast, and let's have all those profits flow back to China - for some it will be a dilemma, support those terrible Aussie banks or those terrible Chinese who are taking overt the world....it will be Hobson choice for some on this site for a start, it will be fun to watch.

Be just easy enough when they are wholly owned by the Chinese govt, with what I would imagine are unlimited resources to grind down the opposition to a pulp. Yup, a real fair and level playing field it will be - NOT

And yes raegun, as you can image, even many of those who are the most anti Chinese investment amongst us will still rush their Aussie bank mortgage across to the Chinese bank if it's 25bps cheaper, whilst at the same time criticising NZ  farmers for selling their farm to a Chinese company for a good price.

As for the Australian Banks
Can't believe how slow nz lever-pullers are

Anybody who has been paying attention will be aware that at least 3 times over the past 3 years, I have advocated a banking licence fee of $½ billion per annum per bank to hang up their shingle
 
No traction
 
Well, would you believe that now, the australian greens and the independants are seriously demanding a "Resource Rent Tax" on the banks along the same lines as the Minerals Rent Resource Tax (MRRT) which is still in place. The Liberals tried to cancel it but they got blocked in the upper house
 
I'm fairly confident it will get serious consideration in the next year or so because the Ruling Liberal Party do not have control of the Upper House, and it's one area they can make a concession on because two of the banks have covered themselves in "inglorious shit" recently with their fraudulent carryings on - more to come in the next 6 months for sure. The powerful banking lobby have been silent in recent times
 

The irony of that is, it will be based on profits, and those profits comprise in part, profits made in new zealand, so, the australian government will extract a rent tax on new zealand made profits, while new zealand looks on silently with their jaws on their knees

Interesting, why only banks ?  Why not insurance companies, super markets, farms and everything else owned by foreigners, or is it only Australians you want to impact ?  What's the logic ?

You are right - I was using a rifle rather than a blunderbuss
 
Here's the latest on never ending Commonwealth Bank fraud - just popped up
http://www.smh.com.au/business/asic-probes-commonwealth-bank-over-financial-planner-forgery-20140808-1020zn.html

Because Banks are kinda  in public/private relationship/partnership  ... ie.. with the Reserve Bank.
A banking system could not survive for very long without a Central Bank there to provide liquidity..... and the payments system.
Banks seem to have sweetheart arrangements with Centrail Banks....  when push comes to shove. 

Very true Roelof, but financial stability is one of the key roles of the central bank and the reason central banks ar set up. They cerainly are there to support the banks, but as a depositor in a bank what do you want when you get a panic that may have merit or not.

Interesting that "State-owned China Construction Bank, chaired in New Zealand by Jenny Shipley, was registered as a New Zealand bank earlier this year, while Industrial and Commercial Bank of China, chaired here by Don Brash, was registered as a New Zealand bank last year." The current Nats will surely sponsor more of the same for young Bill, even F'JK if he gets bored in Hawaii.

Cambell Live had a text poll "Should Foreigners be allowed to buy NZ Farms". 18,000 people replied and 96% said No.
Of course it was a self selecting poll but....?

self selecting poll, but............. but 18,000 felt strong enough to pick up the phone

What Neville Bennet Said

"When the sacredness of property is talked of, it should always be remembered that any such sacredness does not belong in the same degree to landed property. No man made the land: it is the inheritance of the whole species."

But I think we need to go further and increase community control of land. My text will be from J.S.Mill:

“The land of Ireland, the land of every country, belongs to the people of that country."

 
http://www.interest.co.nz/rural-news/53668/opinion-land-crisis

You are assuming that "the community" will take better care of land than will private owners.
 
Why would you assume that?
 

No I'm not assuming that, but that isn't the issue; the issue is that citizens come first. Foreigners have come in with capital and made fantastic farmers.
There are two issues there: the quality of any particular foreign farmer and the extra capital. The question is why is New zealand so short of capital?. That was looked at by the Savings Working Group: [paraphrase] "why do we get such crap governments" and they blamed the policy choice of increased immigration (to a degree). That's a field of enquiry of no interest to the liberal media and definitely not the powerful construction sector/ banks/ property developers etc.
It is good that a keen Dutchman moves here and starts a farm; it is even better if it is a level playing field where opportunity is across the board so an average Kiwi farmer can enjoy farming in a different situation. The world isn't a level playing field, however, world population is following a J shaped curve and the farmers who come here tend to be benefitting from high land prices.
 

They (community) took care of it for centuries;
 
Between 1750 and 1850, approximately 4000 Enclosure Acts were passed converting commonable land into the exclusive private property of large landowners. According to the working-class politics of the late eighteenth and nineteenth centuries, these acts impoverished small farmers and destroyed the agrarian way of life that had sustained families and villages for centuries. Read more

Well of course if you confiscate something from somebody without adequate compensation they will be worse off as a result.  That's a comment on the way in which the transition was handled, not on the relative merits of private vs communal ownership. 
 
Now the earlier communal model described in the article sounds lovely - if populated by selfless, far-sighted people with the long-term benefit of the community and the land as a whole, front and centre of their thoughts. 
 
That's not the test of whether a system is likely to deliver sustainable results.  If you start from the premise that this is how people are, then outcomes will be good under any system of government.   
 
The test is how the system will function in the hands of people whose main motivation is to get the best possible outcomes for themselves and their families for the least possible outlay - in other words, people more closely approximating to most of humanity than the prelapsarian paragons dscribed above.  Under those circumstances a system based on enforceable private property rights and voluntary exchange is more likely to encourage good stewardship of resources.

"under those circumstances a system based on enforceable private property rights and voluntary exchange is more likely to encourage good stewardship of resources."
Yeah right, and how's that system working out so far?

Had a look at the environmental record of the Soviet Union recently?

No, but a review of reported domestic Chinese practice in this matter is currently critically more important than just a matter of interest. Feel free to enlighten the readers further.

Thank you, this helps my point that countries where there is less or no private property ownership tend to be less conducive to concern and care for the environment. 
 
You are presumably concerned that Chinese businesses will import such practices here.  However, the land they own will be subject to NZ environmental regulation, just as it is when owned by New Zealand businesses and individuals.  And as owners they will have a stronger interest in maintaining the long-term value of the land than they do in China, where it is only possible to lease land.
 

Not at all -  I just thought if you believed Russia was an example to defend your musings why not China. $Trillions of Chinese bank debt for private ownership has been struck in the last few years. Read more
 
Weren't the Crafar farms subject to NZ law prior to the sale to others?
 
Many urban anglo saxons amongst others lease land/buildings (large mortgages) from the Duke of Westminster in pristine Belgravia - I did myself for a while in Mayfair - BP was the owner.

Throw it the other way, can you provide proof private ownership is better?
What does private ownership of say common land offer the commoner?
Private ownership of ex-common land however then grants the private owner a  monopoly and can charge accordingly. 
The big point to watch for in either case is population perssure of course.
So is community owned land better looked after in the long term? if its more democratic it may well be. 
 
regards
 

Who is more likely to be motivated to put resource and effort into caring for land, or any other form of property:  somebody who will directly benefit from any increase in the value of that property, ie its owner; or somebody who is unable to prevent anybody and everybody else from benefiting from his efforts?

You mean property rights - the unfettered right to pledge land as collateral against debt.
 
Corporations are much better provided for and adept at securing this facility than any individual can ever hope for - hence the trend to outright corporate control of our rural if not residential ownership rights.

No, I don't mean that in particular.  Property rights comprise a lot more than than the ability to use the property as a collateral against debt.  In any case, if property is used for that purpose then my original point still stands - somebody has a very clear self-interest in maintaining, or even increasing, the value of the property.  No individual, or corporate entity, has any such interest when the property is owned by everybody and nobody. 

"a very clear self-interest in maintaining, or even increasing" actually not true. I know of several instances where the private owner(s) ran down the farm, or business or housing (rental) capital value by minimalising maintenance.
Sure individuals and communities can look to enhance property values, investing in a council owned dam, public gardens etc etc.
regards
 

What is your example of  private owners allowing the value of their properties to deteriorate, supposed to prove?  Are you saying that in general people deliberately act against their own financial interests, or that people sometimes make mistakes in knowing what's the best thing to do for themselves?  Incidentally, did you actually ask any of these people why they were acting in that way?
 
Do you also know of individuals who have voluntarily "invested" in publicly owned property in the way you decribe?     I would describe that as charity, not investment.  If the property is publicly owned, then they are not going to get a financial return on it, and if they are not doing it in the expectation of a financial return then it's not an investment. 
 
Now they may derive personal spiritual satisfaction from knowing that their money has gone to a cause that they think worthy, and that is a fine and commendable thing.  But as noted above, a system which relies on the assumption that everybody is motivated mainly by charity rather than by their own self-interest is likely to deliver disappointing results.

So "more likely" you have your typical libertarian opinion, no facts?
Also there is a difference between community controlled and common land, typically common land lies fallow a  great place for native species, community land is controlled by peers who use it.  Also looking around the world community land (village ownership style) is shared and hence seems not overly exploited and often ruined like private land can be by an individual.
Also,
https://www.globalpolicy.org/social-and-economic-policy/world-hunger/lan...
Of course the issue then is population pressure.
regards
 
 
 

I repeat. Why would an individual want to "ruin" his own private property?  Is that how you are managing your house and bank account? 
 
Now shared property can no doubt work very well in a small community when everybody knows each other and has a concern for others' welfare, or is concerned to maintain fellow-villagers' good opinion.  Any system populated by such people is likely to work well.   
 
Introduce the possibility of some individuals being more interested in their own benefit than in the community's, however, and a system of shared property starts to crumble.  Why should John Individual work - why should he moderate his own consumption of the common good -  when the shared ownership means that other people will benefit from his labours, or from his abstention?   What's to stop him grabbing as much as he can from other people's labours instead?
 
Is your house open to anybody who wants to use it?  Is your bank account available for common use?

Why would an individual want to "ruin" his own private property? Is that how you are managing your house and bank account?
Depends what you mean by ruin doen't it?   A great deal of our land is being ruined as we speek.  Take a fly over Gisbourne, Wanganui and other back counrty farmland.  Much of it generating income, but gradually being ruined as the topsoil is continually eroded. Given time it will be bare ridges growing beggar all. 
 

What exactly is your alternative model?
 
Do you think that the damage you mention would be less likely to be happening if the land were open to anybody and everybody?  Because of course everybody would be very willing to put their own effort and resources into caring for the common resource, in confidence that nobody would think of taking advantage of such a situation to harvest crops that somebody else had planted, or of taking advantage of somebody else's willingness to forego short term benefit for the sake of long term sustainability.
 
Or if were being managed by the Government?   Because of course, the Government would NEVER put short-term income creation ahead of the preservation of long-term value.
 
 

Not sure I agree with the conclusion - clearly China's capital controls have not worked at all so far as the Chinese have made huge purchases of assets in many Western nations. Where did these rich Chinese make their money? Many of them in the Chinese property ponzi no doubt.
Depending on the extent of the Chinese property price collapse/drop/whatever there might actually be capital going the other way! The common perception is Chinese buy offshore with cash but infact many use debt to finance property purchases.
Also, your inference is that China has an excess of capital looking for a home - it that's the case why has there been such an influx of capital to China recently? Reason - the People's Bank of China has been keeping credit reasonably tight.
 
Credit to Hugh Pavletich for posting these links on Macrobusiness,
http://www.ecns.cn/business/2014/08-08/128542.shtml
http://www.forbes.com/sites/kenrapoza/2014/08/07/in-china-beginnings-of-...
http://www.cnbc.com/id/101904662

This China factor.
People believe (myself included) that property prices will never settle as long as we are exposed to the Chinese market (i.e as long as they are allowed to migrate and or invest).
This could be hysteria, but I don't think so. They people who believe the opposite also tend to be the ones who downplay global warming.
Oviously it isn't just China but China has an image (perhaps because 91% are of one ethnicity and they are described as a civilisation state).
What's more they are developing and getting rich on trade at the expense of developed nations manufacturing, and as much as I like the cheap electronics, wise people know that isn't what life is about.