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September 25, 2012

Sydney Investment Summit Focuses on China

by Phil Mercer

Politicians and business leaders have gathered in Sydney for a special one-day summit on attracting billions of dollars of Chinese investment.  

China is Australia's largest trading partner and luring investors is the subject of a conference Tuesday at the New South Wales state parliament in Sydney.

It has brought together federal government ministers and their state counterparts, as well as business leaders and academics. They are discussing ways to encourage the Chinese to invest in Australian infrastructure projects.

A recent report published by the government in Canberra says that, in the next two decades, Australia would need to invest more than $200 billion in infrastructure to sustain its energy and resources industries.

Analysts say much of this investment will need to come from overseas, particularly China.

Professor Kerry Brown is the executive director of the University of Sydney’s China Studies Center, which organized Tuesday’s forum.

“China is a natural partner to look at investment," said Brown.  "It has got U.S. $3.5 trillion of foreign exchange reserves, so (there is) a huge amount of potential for it to become an outward investor (country that invests overseas).  At the moment, it is only one percent of the investment into Australia.  So that could significantly increase.  We want to understand how we can engage with this.  We want to understand what the impact of it might be, understand where some of the risks might be; but, also how we can do it better -- how we can maybe be better partners for Australian and Chinese investment.”

However, Chinese investment in Australian agriculture has generated concerns among farmers and conservative politicians worried about foreign control of key assets.

Earlier this month, Australia’s largest cotton farm, Cubbie Station, was sold to a Chinese-led consortium. Canberra has said such investment is crucial to Australia’s economic future.

However, speaking in New York, Australian Foreign Minister Bob Carr has warned that Australia’s future prosperity depends on economic diversity, and should not rely on sales of resources to China, which have insulated the country from the worst of the global slowdown.

Carr highlighted trade opportunities in emerging markets in Indonesia and India as Asia’s middle-class expanded by more than 100 million each year.