Saturday, November 8, 2014

No answers only heartache six months after Korean ferry disaster

Picture: Peter Ryan

The sinking of the Sewol ferry off the Korean peninsula six months ago remains a source of deep sadness and heartache in South Korea.

The fallout from the tragedy stunned the nation and even today many people remain suspicious about the Korean government's investigation amid claims of fraud, embezzlement and corporate coverup over who's to blame.

I visited a tent city in downtown Seoul, not far from my hotel, which is dedicated to the lives of the more than 300 people - mainly high school students - who drowned when the Sewol ferry capsized back in April.

Here's my report from this morning's edition of Saturday AM on the ABC.

Picture: Peter Ryan

Yellow ribbons mourn the 300 lives lost when the Sewol ferry sank in April  Picture:Peter Ryan

Picture: Peter Ryan

Most of the Sewol tragedy victims were high school students who stayed in their seats waiting for instructions as the ferry capsized and sank.

The ferry captain is facing the death penalty, accused of jumping ship and saving himself. 

But he says the company is to blame for overloading the ferry and commissioning and illegal redesign.

The Sewol investigation has deadlocked Korea's National Assembly with more than 90 pieces of legislation, including a free trade agreement with Australia held up by the highly emotional and divisive investigation into the Sewol tragedy.

ABC business editor Peter Ryan with protester Misun Cho at the tent city

Many victims of the Sewol tragedy were high school students - protesters now worry their children are unsafe Picture: Peter Ryan

Picture: Peter Ryan

The vibrant music could be mistaken for a celebration. But there's only sadness here. Picture Peter Ryan

I visited South Korea as part of the Australia-Korea Journalist Exchange. 

Thanks to the Walkley Foundation, Australia's Department of Foreign Affairs & Trade and the Korea Press Foundation.

Friday, November 7, 2014

China property market a key global risk, Reserve Bank warns

Today's statement from the Reserve Bank provides some key reasons why we should be alert, though not necessarily alarmed, about the local and global economic picture.

While the RBA says the global outlook appears to be "broadly balanced", it's clear that low level alarm bells are ringing in central bank boardrooms around the world.

The big source of nerves is China's property market, which the latest quarterly statement describes as a "key risk".

Listen to my report broadcast on The World Today.

The RBA says Chinese property investors have been a source of uncertainty for some time, even though authorities have been trying to engineer a slower growth in property price - in other words, to prevent a dangerous bubble.

There's a chance that strategy might have worked given that the market appears to have cooled slightly.

However the RBA appears worried that some purchasing restrictions put in place have now been removed and that now "most cities and authorities have acted to supply some support to purchasers and developers".

The RBA is also nervous that if the Chinese property market slows down too rapidly, it could hurt Chinese commodity demand, economic activity or financial stability which would have implications for not only Australia but the world.

Even so, the RBA still believes China will achieve economic growth of 7.5 percent this year but thinks that should trend gradually lower as authorities trade off stellar expansion for financial stability.

Another key risk identified by the RBA as "a significant source" is a constant one - the still high level of the Australian dollar.

Despite recent falls as low as 85.66 US cents yesterday, the RBA says the dollar remains "above most estimates of fundamental value" and that a lower currency "would achieve more balanced growth in the economy" .

Last week's decision by Japan's central bank to ramp up its stimulus is now a fly in the RBA's ointment in terms of taming the dollar.

The RBA worries that funds from Japan will come looking to Australia for a high yield home and as a result "could hold the Australian dollar at a higher level than real economic fundamentals would imply".

Put simply - the RBA says the dollar might appear to be falling, but maybe not as much as it might appear.

Finally, the RBA says the timeline for the end of the investment phase of the mining boom is causing local angst.

It sees the speed and timing of any anticipated recovery in non-mining business investment as a major uncertainty.

The RBA says while "a substantial pickup" in the non-mining sector is some way away, it believe the fundamentals are in place for the transition from mining investment to begin.

And if the appetite for risk improve, the RBA is betting that growth in non-mining investment could be bigger than forecast.

Else, the RBA's latest statement is steady as she goes with growth steady, though still below trend, inflation within the 2 to 3 percent bank and the jobless rate expected to remain elevated above 6 percent.

As for the direction of interest rates the Reserve Bank is sticking to its no surprises policy and repeated that "the most prudent course" remains of period of stability.

For most economists, that means a rate rise mid to late 2015 - or until the US Federal Reserve decides it's time to push the rates button.

That is, unless any of the above risks nominated by the RBA, turn into bigger problems or even shocks.

Wednesday, November 5, 2014

China accused of blocking G20 anti-corruption agenda; Transparency International Billboard banned

China is being accused of attempting to block key anti-corruption principles scheduled to be discussed at the G20 Leaders Summit to be held in Brisbane in a fortnight.

The anti-corruption watchdog Transparency International says the Chinese government is resisting proposed measures that would unravel complex corporate ownership structures that can hide who really controls a company.

The draft beneficial ownership principles are critical to a global corruption crackdown on shell companies and secret jurisdictions and a range of opaque practices that allow individuals to launder dirty money.

Transparency International's senior advocate at the G20, Maggie Murphy, says a Chinese veto would take the anti-corruption principles off the table.

"If China does not sign on to the principles that are on the table, the G20 is consensual and they will not ahead and that would be a really blow to what has been  a really great initiative driven by Australia from the start," Ms Murphy told the ABC.

"At the moment, the document has already been passed at a couple of different levels within the G20 structure. What would be lacking would be that final signoff from leaders and without that it's a real blow to true political will."   

"Nothing gets through unless everyone's happy."

The banned G20 anti-corruption billboard for Brisbane Airport deemed too political Source: Transparency International

The reluctance of China to sign on to anti-corruption measures comes as the world's second biggest economy targets government officials, military leaders and business chiefs allegedly involved in corruption.

Ms Maggie says although China prefers to manage its own affairs, the move to block anti-corruption measures is intriguing.

"China itself is trying to push forward its own anti-corruption initiatives and really trying hard to put a stop to money flowing out of its own country,"

"What these beneficial ownership principles would do would be to make it  harder to hide your identity and harder to shift those funds out of the country. And that means potentially corrupt politicians and corrupt public officials in China itself.

"We think it's absolutely in China's interests to adopt these principles and to go even further themselves."

With a fortnight to go before G20 leaders arrived in Brisbane, it is understood organisers are working behind the scenes to keep the anti-corruption pact alive.

"Achieving consensus among all G20 members on an approach to beneficial ownership transparency is an important objective for Australia's G20 Presidency," a G20 spokeswoman said.

"We are working constructively with all G20 members to achieve this.  It is not for Australia to comment on the views of any individual G20 member. Any decisions around beneficial ownership taken by G20 leaders will be announced at the conclusion of the Brisbane Summit."

But as preparations ramp up, Transparency International is protesting a decision to ban a billboard which would greet leaders and delegates outside Brisbane Airport.

Transparency International says the billboard's slogan "dirty money not welcome here - G20 it's time to act" was regarded as too political for the G20 Summit.

Maggie Murphy does not know who made the decision but says until now, Transparency International has had good relations with G20 organisers.

"It seems strange we can't communicate this big anti-corruption message to citizens," Ms Murphy said.

"With this G20 anti-corruption drive, we would hope that all of the leaders and any political party would stand by this message."

However, Australia’s G20 organisers have washed their hands of the decision to veto the controversial billboard.

“The decision to accept or refuse content for the billboards at the Brisbane Airport is a matter for the advertising company which owns the license for the billboards and the Brisbane Airport Corporation. These are not decisions in which the Australian Government has a role.”