Peter Drysdale is Emeritus Professor of Economics and the Head of the East Asian Bureau of Economic Research and East Asia Forum at the Crawford School. He is widely recognised as the leading intellectual architect of APEC. He is the author of a number of books and papers on international trade and economic policy in East Asia and the Pacific, including his prize-winning book, International Economic Pluralism: Economic Policy in East Asia and the Pacific.
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Australia is in danger of over-simplifying its responses to Chinese investment and missing out on vital economic opportunities, warns Crawford School Professor Peter Drysdale.
Professor Peter Drysdale says Australian policy responses to Chinese overseas direct investment (ODI) have been infected by populist politics.
“In Australia the policy response to the surge of Chinese ODI has been far from sure-footed and an established, well-functioning foreign investment regime has been severely shaken by undercurrents of national political populism and foreign security dog-whistling.
“The element of populism in Australia’s response to the rapid growth of Chinese ODI has acted as a source of political confusion in Australian policy development and in Chinese perceptions of Australian policy.
“For example, Australia’s Foreign Investment Review Board has introduced new investment guidelines to deal with the rush of investment from Chinese State-owned enterprises (SOEs), but this has occurred on a largely ad-hoc basis.
“New foreign investment guidelines have also singled out proposals from SOEs for special scrutiny. But, the delay in considering Chinalco’s bid to buy into Rio Tinto during the global financial crisis, for example, saw the bid fall over commercially, and raised questions in China about Australia’s investment regime. The Australian security agencies have also recently restricted the business dealings of telecommunications giant Huawei Technologies, a big player internationally and increasingly in Australia, too.
“Whatever the issues, this is an extremely strange and ham-fisted interference in economic policymaking processes. And with Chinese investors reportedly suspending all investments in magnetite projects in Western Australia and the suspension of further investment activities by leading miner Shenhua, it seems that China is re-assessing Australia as an investment destination. The retreat of Chinese ODI from Australia will likely gather pace unless Australia’s drift on foreign investment policy receives an urgent makeover,” he said.