Debate intensifies over Chinese firms investing in Australia
Updated
With many traditional European and American sources of investment now dry, China's financial might has come into play. But there's a big divide between those who say China can help Australia through the global financial crisis, and those who say that some investment deals are giving Chinese companies too much influence in Australia.
Presenter: Linda Mottram, Canberra Correspondent
Speakers: Mark Taylor, resources analyst; Senator Bob Brown, leader, Australian Greens Party; Professor Tony Makin, economist, Griffith University; Simon Crean, Australian trade minister; Colin Barnett, premier of the state of Western Australia
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MOTTRAM: China is looking to further secure access to vital commodities. Australia is a very big supplier. And with the global economic meltdown carving heavily into the share value of some of Australia's big mining interests, Chinese companies have seen a chance to get that access at bargain prices, to drive the engine of its future development.
Chinalco's bid for a stake in Rio Tinto and Minmetals takeover plan for heavily indebted OZ Minerals are just two of China's multi billion dollar investment plans in Australia that are making very large headlines. They play to a deep seam of economic nationalism in Australia, perhaps best captured in the phrase 'selling the farm'.
Resources analyst, Mark Taylor.
TAYLOR: Our resource base is one of the key foreign income sources we have and resource mining is one of the things that this country does best and in which we have a competitive advantage so every time we look at selling down a portion of that inheritance that we have we should look at it extremely carefully because it does have long term implications for the financial wellbeing of the country.
MOTTRAM: Beyond that argument there's another dimension to the concern about China's interest in Australian strategic assets and it's put most strongly by the leader of Australia's Greens Party, Senator Bob Brown.
BROWN: Firstly, because this is part of the communist dictatorship in Beijing its not open to scrutiny and I don't think massive investments in Australia to take over control of our resources ought to be outside the scrutiny of the Australian democratic arena. The second thing is that there is no way that Australian corporations could make such controlling investments in China.
MOTTRAM: It's a position that sits inconsistently with Australia's deep trading relationship with China.
Professor Tony Makin from Griffith University has written extensively on global finance.
MAKIN: Well, on those grounds we shouldn't be trading with China, on those grounds we wouldn't have had the resources boom, on those grounds many Australian companies would not be viable because they wouldn't have a market to sell into.
MOTTRAM: The man who makes the decisions on foreign investment proposals in Australia is the treasurer, Wayne Swan. He works from the recommendations of the country's Foreign Investment Review Board, which enforces one of the most restrictive foreign investment contexts in the word. It considers, among other things, the national interest. But the term is not defined. And if Mr Swan is to allow China the kind of investment access it wants in Australia, then politically he'll be under pressure to show that Australia has received something in return.
Australia's trade minister, Simon Crean, says that's already on the table as Australia negotiates a free trade agreement with China.
CREAN: Free trade shouldn't just be about goods it's also got to be about services, it's got to be about investment flows. But we have limitations, Australians have limitations, on what it can invest in in China. And we've said to China, OK, you want to talk about investment into our country, let's sit down and have that discussion as part of a framework to sustain and grow both economies.
MOTTRAM: Another key political figure in the discussion is the premier of the resource rich Australian state of Western Australia, Colin Barnett. He's an enthusiast for foreign investment in Australia, but says Australia does need to be careful.
BARNETT: We need to be on guard as a country as indeed we were in the 1960s when Japan was the sudden big new player on the scene. This is history repeating itself 50 years on. So we do need to be careful. And I think what is lacking this time is the setting, if you like, of the rules of the game and that understanding between governments in Australia and in China. To some extent China came as a rush. And I think the fault is more on Australia's side than China's side to be honest.
MOTTRAM: Australia will need, on that view, to catch up fast. China is putting on pressure, not just through the growing number of investment proposals for Australian strategic assets. Last week, Lou Jiwei, the powerful head of China's US$200 billion sovereign wealth fund, the China Investment Corporation, met with Australia's treasurer in Canberra. Under discussion was Beijing's concern about possible obstacles to investment by sovereign wealth funds and a suggestion that the China Investment Corporation might invest in Australia's infrastructure building projects as part of Canberra's package to avoid recession.
In the meantime, there's a powerful mix of genuine economic concern and traditional nationalistic sentiment verging on xenophobia that's coalescing around China's investment push.
