With the release of the Australia in the Asian Century white paper, Australia’s relationship with China continues to be one of the key themes in the national debate. But Australians seem unsure of how to view China.
The Foreign Investment Review Board’s approval of the sale of Cubbie Station and agricultural land in Ord River to Chinese-led consortiums has sparked heated debate in regional Australia about the wisdom of "selling the farm” to foreigners. This issue was quickly picked up by the Nationals, although both Labor and the Liberals were more circumspect in their responses.
Labor responded to the outcry by announcing the creation of a register of foreign interests.
Over the past two years, we have been undertaking research on attitudes to China around major transactions involving Chinese companies and following this up with specific research among voters in marginal seats about their attitudes to Chinese investment. We have also been tapping the thoughts of Australian business leaders about the relationship with China via the Business Spectator GA Research CEO Pulse Survey.
These responses – like the tenor of the national debate about Chinese investment – have highlighted Australians’ complex perceptions of China. Indeed, Australia seems to be caught between perceiving the incredible opportunity the China relationship offers and viewing China as an ever-present threat.
Our research suggests that Australians are generally comfortable with the idea that our economic future is tied to growth in Asia, and particularly China, even if we feel more cultural affinity with countries like the UK, New Zealand and the United States.
The view is that trade with China saved Australia from the global financial crisis. This was a source of comfort in troubled economic times. We were friends with benefits, as one commentator aptly put it.
The underlying fear is that we currently rely on them too much and the benefits will not last.
China has emerged as Australia’s major trading partner and fastest growing source of direct foreign investment, but Chinese investment is slowing.
While the mining boom has given renewed vigour to our relationship with Asia, the CEO Pulse survey results suggest that Australian chief executive officers are concerned about the flow on effect of the reduction in commodity exports combined with lower prices on the mining sector, and consequently consumer and market confidence in Australia.
At first blush, opposition to Chinese investment looks like xenophobia, but our research suggests Australians are caught between the fear that China will no longer need us and the fear that we do not have a strategy to meet our long-term interests in the relationship.
China is much larger than Australia and justifiably many Australians are worried about how our relationship with China can ever be equitable, given China’s market power and military might.
At the heart of concerns in regional Australia about Chinese investment is the legitimate fear that we are selling off land, without corresponding investment from Chinese or other foreign purchasers in infrastructure and jobs, for example.
To continue to reap the benefits of the relationship, bilateral trade needs to mature.
A key discussion in Australian business over the last 12 months has been concern around productivity levels. Our lack of investment in efficient and accessible infrastructure is hampering our national productivity. We are currently facing the prospect of congested ports and access to those ports by road or rail is nearing capacity.
Australia has a long list of infrastructure needs across the country, but we lack the capital to meet all of those needs. With appropriate regulations in place, Chinese investment could help facilitate our export market and leave a lasting legacy for the Australian economy.
With the slowdown in the resources sector, Australia needs to identify and support new trade options. Australia’s services industry is looking to the government to help open up new markets for Australian services, to satisfy demand in China’s rapidly expanding middle class. This goes beyond education and tourism to include architecture, engineering, financial services, legal services, health and the cultural sector.
Our exporters of wine, dairy, world-class seafood and wool also need support consolidating their access to Chinese markets. There are huge economic opportunities in these sectors and in this context Chinese investment is an important mechanism for unlocking these opportunities.
Australians want to move past the casual "friends with benefits” arrangement and develop a more mutually beneficial and committed relationship.
The release of the Australia in the Asian Century white paper needs to give comfort to Australians that the government has a detailed plan for ensuring that Australia will continue to reap the benefits of the China relationship. With an Asian Century beckoning, it is time to move beyond the narrow confines of a debate about the threat of selling our assets to focus on building a mature relationship with benefits for both countries.
If we fail, we will have the rest of the century to understand the opportunities we have lost.
Michael Morgan is head of Kreab Gavin Anderson Australia’s Asia Practice and on the Board of Directors for the Australian Services Roundtable. Damon Jalili is a Research Director for GA Research. Both are based in Canberra.