Australia has much to gain from two-way investment with China writes ACBC chairman Frank Tudor.

Australia’s foreign investment review system is something that has been built by successive governments from across the political spectrum. It attempts to strike an appropriate balance between transparency and of the legitimate role of government to safeguard national security, economic and structural interests. Our financial regulatory framework is the envy of the world and will only bolster the news from the World Economic Forum, which saw Australia positioned as the world’s second leading financial centre after the United Kingdom.
In a recent speech to the Australia China Business Council’s Investment Forum, Patrick Colmer, the Director of the Government’s Foreign Investment Review Board stated that over the last 18 months, the Government had approved over 90 separate transactions of Chinese origin, which represent a total of more than $34 billion. The implications of this figure on our economy are clear – our terms of trade, our employment market and our communities throughout rural and regional Australia can only be made stronger through a continued investment relationship with China.
The Government is acutely aware of this and continues to strive to get the balance right.
Colmer went to great lengths to articulate the view that Australia should be seeking win-win outcomes. Australia needs to ensure that our resources sector remains open and central to our role as a globally competitive trading partner while recognising China’s increasing status as a source of capital with an interest in securing resources to power its continued development well into the twenty-first century. Colmer pointed out that while Australia’s foreign investment review system is enshrined in legislation, the government assesses each transaction on a case by case basis, which is guided by a clear set of publicly articulated criteria and mindful of a range of public policy considerations.
Yet from a national interest perspective, Australia needs to ask the question, if we trade so much with China, do we need inbound investment from China? The short answer is yes. The fact is our country has run account deficits for the last 36 years, which in simple terms mean we import more than we export. To finance this deficit and maintain our current standard of living, we need a constant inflow of foreign capital.
As a country we have been on a borrowing spree in recent years to finance this deficit. From 2001 to 2008, our net foreign debt as a share of GDP increased from 44 percent to 54 percent, the highest level in over 40 years. The Federal Government’s first post-financial crisis budget has significantly added to the public debt burden. As we have done in the past with Japan, the US, UK, and more recently China we should encourage more foreign direct investment into Australia, which can be used to build factories, create jobs, generate development in the regions, and provide much needed funding for vital resources exploration and infrastructure works.
The Council’s Investment Forum reminded us that the investment relationship is fundamentally a two-way process and reciprocity remains a key mantra of the Council; Australian companies investing in China have much to gain from Chinese development.
Kevin Hobgood-Brown described Sino Gold’s path to becoming Australia’s largest operating investor in China and on the eve of opening a branch in rural Chongqing, Warwick Smith outlined the length and breadth of ANZ’s extensive and growing investments in China. Long time friend of China and former Australian Prime Minister Bob Hawke outlined the great work achieved over many decades in ensuring the continued development of Sino-Australian relations on both political and commercial levels. He pointedly referred to the tone of bilateral exchange in the 1980s and reflected on how far relations have matured since Gough Whitlam’s visit in 1972. In celebrating the People’s Republic’s 60th anniversary and over 30 years of China’s integration with the world economy, it is worth taking stock of the great leaps forward taken by both of our economies and the depth of our bilateral relationship. Our relationship is one characterised by a great synergy of interests, characterised by mutual need, exchange and cooperation, dialogue and genuinely bilateral investment. ■

For more information on the Council’s recent Investment Forum or for copies of conference proceedings, please contact the National Secretariat on
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