is to more carefully consider proposals by consumers to control existing producing firms. We usually welcome and encourage some participation by the buyer…but we need to ensure that investment is consistent with Australia's aim of ensuring that decisions continue to be driven by commercial considerations and that Australia remains a reliable supplier in
the future to all current and potential trading partners.
The rationale for such an interventionist approach was explicitly justified by reference to the international debate on the regulation of Sovereign Wealth Funds. The empirical basis for such an assertion is hard to justify.70 Not surprisingly it is a theme also developed by Chinese and Chinese-linked mining concerns. Interviews conducted by this researcher in Beijing in recent weeks make it clear that both components are both puzzled and annoyed at what they perceive to be an admixture of discriminatory practices, bad faith and policy incoherence. One of the most significant investments in Western Australia has come from a subsidiary of CITIC Pacific, a listed Hong Kong corporation, in which the Chinese government retains a thirty per cent passive stake. The director of CITIC Pacific’s Australian operation is scathing about what he sees as the apparent lack of knowledge in Canberra of either Chinese realities or the economics of iron ore extraction. Wang Gongcheng believes that Australian mindset remains wedded to outmoded conceptions of Chinese management:
Things are very different now to when I first negotiated the agreement for China’s first substantial foreign investment [with Hammersley Mines in Chennar, now a joint venture with Rio Tinto]’ Economic decision-making is now devolved totally to the enterprises themselves, which have responsibility for sourcing the necessary financing. In such circumstances, it is understandable that enterprises are seeking to secure supply. It is in their commercial interests to do so’ 71
While it is arguable that Citic Pacific could be construed as a private company, it cannot be vouchsafed because CITIC Beijing controls a thirty per cent stake.72 For
69 See W Swan, ‘Australia, China and This Asian Century’ (Speech delivered at Australia-China Business Council, Melbourne, 4 July 2008).
70As with the United States, the rate of Chinese investment lags international competitors considerably. In 2006-2007, the United States was the single largest investor with US $45bn. In total US S156.4bn was invested, with China contributing only US $10bn. According to one of Australia’s leading political economists, Peter Drysdale, an emeritus political economy professor at the Australian National University, ‘the current ambiguities are damaging to Australia's economic and long-term political- strategy interests’, see M Stutchbury, ‘Swan’s Line in the Sand Risks Turning Chinese Investors Away’, The Australian (Sydney), 5 September 2008 (Online Edition). Drysdale, along with Christopher Findlay argue in a recent paper: ‘Unnecessary regulation of capital from this source into the Australian market will not only be detrimental to Australian economic interests by driving it to other markets, possibly less supportive of reform of corporate structures and corporate behaviour, but is likely to encourage a retreat to appeals to the power of the state in ways that are likely to be damaging to both our long-term economic and political interests, see P Drsdale and C Findlay, ‘Chinese Foreign Direct Investment in Australia: Policy Issues for the Resource Sector’ (Paper delivered at East Asia Forum, Australian National University, Canberra, 4 September 2008).
Wang Gongcheng, CP Mining Management Pty Ltd (Interview, Beijing, 5 September 2008).
72 Adding to the confusion is the extent to which the protection of the national interest entails investment from non-state actors from ostensibly democratic regimes. This is far from hypothetical. Russian oligarchs have also moved aggressively into the Australian resources sector.