By Zhang Junsai, Chinese ambassador to Australia
The past two years since I was accredited as the Chinese Ambassador to Canberra witnessed intense media interest in China boom, China decoupling and more recently, China investment. Hot debate and arguments for or against investment by Chinese companies are not surprising. But rather than using emotive language, to approach this matter in a rational and comprehensive manner perhaps will generate a holistic and objective observation.
When I finished my last posting here eight years ago, two-way trade between China and Australia was merely 8.45 billion US dollars. Last year it jumped to 59.7 billion, a year-on-year increase of 36.1%. It would have certainly exceeded 60 billion if not for the global financial crisis. Fast growth in China, the two economies' complementarity and deepening economic cooperation have elevated China to Australia's largest trading partner.
A strong trade partnership, as between China and Australia, usually entails and necessitates a rise in mutual investment, as a trade relationship that excludes investment is only lopsided and unsustainable.
Despite recent growth, investment from Chinese companies is small in overall size, and at an early stage of development. By the end of 2008, about 300 Chinese companies made direct investment in Australia, with a paid-in volume of 3 billion US dollars (not including Chinalco's Rio bid), or less than 1% of total foreign investment in Australia.
Obviously, the size of investment from Chinese companies in Australia does not match the current state of our economic relations and trade.
The first investment by an Australian company in China occurred over two decades ago. In fact, Australia is one of the main sources of overseas investment in China.
Until last year, China has approved on a cumulative basis investment from 8,954 Australian companies with a paid-in volume of 5.82 billion US dollars. In 2008 alone, an additional 337 Australian companies entered China with an investment volume of 400 million US dollars. The bulk of these companies run a good business in China. Their areas include energy and resources and services and they target both traditional industries and new markets.
For instance, Telstra acquired 51% stake of China's Soufun Holdings, which runs China's leading real estate website. BlueScope established a steel company in China with an investment of 430 million US dollars. Sino Gold stands as one of the top foreign-funded gold explorers in China. And ANZ has invested 1 billion AU dollars in Tianjin City Commercial Bank and Shanghai Rural Commercial Bank.
Investment between China and Australia flows in both directions and is mutually beneficial. In a globalized world, investing abroad naturally becomes an indispensable avenue for Chinese companies to expand international business and be part of economic globalization.
Anxiety over Chinese investment stems from nothing but two arguments, namely, state-owned enterprises and subsequent control over Australia's energy and mineral resources. Yet one must understand that the hallmark of China's reform and opening-up program is the establishment of a socialist market economy. State-owned enterprises are no longer entities under a highly centralized planned economy. They are being transformed to joint stock market players that pursue profit, remunerate its employees, pay taxes and endeavour to expand business.
Chinese companies investing in Australia, state-owned or private, do not seek to control Australia's energy or mineral resources. Like companies from other countries, they eye long-term, sound and reliable supply of energy and resources. Apparently, such is conducive to the development of Australia's energy and resources industry, particularly when the financial crisis has taken its toll on almost every economy. It will help fund Australian companies and protect local employment. Companies involved will also have a better access to Chinese market, which will eventually boost Australia's overall growth.
A review of business relations between China and Australia informs us that their economic cooperation, which meets their respective needs, is of strategic importance and mutually beneficial, and has brought real benefits to their companies and peoples.
On-going industrialization and urbanization in China generate rising demand for energy and resources, offering Australia good export opportunities. Australia's export of energy and resources supports China's growth and makes life better for the Chinese people. China's import, the other way around, sustains development of certain sectors in Australia and expands local employment.
In the meanwhile, export of electronic, textile and light industry products from China to Australia lowers Australians' cost of living and enables local companies to focus on services and high-tech industries. External demand feeds robust growth of export-oriented companies in China's coastal areas with employment of millions of migrant workers in cities, which in turn boosts industrialization and urbanization in China.
All this is not confined to trade in goods. It extends to tourism, education, science and technology and finance, with enormous potential to be tapped.
Our statistics show that Chinese made 410,000 visits to Australia in 2008, most of them tourists. Over one million Chinese students are studying abroad and 120,000 of them found their destination in Australia, making China Australia's largest source of international students. Not having calculated its returns on Australia's green economy, I would only stress on deeper understanding between the two peoples as a result of the magnitude of exchanges. It is heartening to see them become emissaries and serve as a bridge between our two countries.
In an ever more interdependent world with interconnected interests, understanding and communication between people acquire particular importance. Good communication simplifies and solves thorny and complex issues and poor understanding only complicates a simple matter and produces problems. This is certainly true as to how we look at Chinese investment in Australia.
We established diplomatic relations 37 years ago. Time has changed, but a lot remains. It is the absence of fundamental conflicting interests between the two countries and a broad range of common interests. It is the complementarity and mutual benefit that reside in our economic relationship. What has changed over the course is greater strategic significance that this bilateral relationship assumes for both countries, deeper and closer cooperation in various areas and better understanding between our business communities, who have chosen to adopt a longer-term perspective on cooperation.
Former Prime Minister John Howard said that China's development benefits not only China, but Australia and the whole world as well. Prime Minister Kevin Rudd also suggested on different occasions that China's growth is good for Australia, the Asia-Pacific and the world. China's recent economic stimulus package to tackle the financial crisis is another piece of good news for the region and the world at large.
Neither China nor Australia can stay immune from the current global economic plight. Our trade is inevitably affected. Lower trade and price adjustments are decisions of the market. As a famous Chinese poem goes, "A thousand sails pass by the wrecked ship; ten thousand saplings shoot up beyond the withered tree". Hardship will be over, as long as China, Australia and the rest of the international community act together. It is eventually the general trend that our business relations brace broader development, to the greater benefit of our two countries.
Let us expect and jointly pursue a cooperative relationship of long-term stability and mutual benefit, which surely encapsulates our cooperation in mutual investment.