A New Look at Chinese FDI in Australia

20 Pages Posted: 3 Aug 2011

See all articles by Peter Drysdale

Peter Drysdale

Australian National University (ANU) - Crawford School of Public Policy

Date Written: July‐August 2011

Abstract

Australia is China's largest destination for FDI, most of it directed to the resource sector. The scale and speed of the surge of Chinese investment into Australia, largely from state‐owned enterprises (SOEs), has raised the question of whether investments by SOEs require special scrutiny. In China, the question is about the treatment of Chinese investment compared with investment from other countries. Clearly, Australia has had a policy environment that is very open to foreign investment, including investment from China. Nevertheless, it is questionable whether measures recently introduced in Australia to review investment by SOEs will restrict Chinese access to the Australian market or encourage a change in the nature of investment projects. How will Chinese enterprises need to adjust to the disciplines and rules in foreign markets? Will the Chinese Government need to take the regulations of host countries like Australia into account in its supervision of SOEs? Australia remains more open to Chinese investment than any other country in the world. Although the issue of SOE investment raises important new questions for policy‐makers in Australia and other countries, Chinese investment in Australian resources is very beneficial and, with appropriate institutional and policy initiatives, will continue its strong growth.

Keywords: Chinese investment, foreign direct investment, national security and nationalism, resources boom

JEL Classification: F21, F23, F33, F50, F52, Q33

Suggested Citation

Drysdale, Peter, A New Look at Chinese FDI in Australia (July‐August 2011). China & World Economy, Vol. 19, Issue 4, pp. 54-73, 2011, Available at SSRN: https://ssrn.com/abstract=1904173 or http://dx.doi.org/10.1111/j.1749-124X.2011.01250.x

Peter Drysdale (Contact Author)

Australian National University (ANU) - Crawford School of Public Policy ( email )

Crawford Building
J.G. Crawford Building, #132, Lennox Crossing
Canberra, Australian Capital Territory 0200
Australia

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