Wed, Jul 30, 2008 - Page 8 News List

China turns blowtorch on Australia

By Sushil Seth

Australian Prime Minister Kevin Rudd will be among the world leaders attending the opening ceremony of the Beijing Olympics next month, but this doesn’t mean that his self-perceived role as Beijing’s interlocutor with the West is coming to fruition.

Indeed, even Australia’s own relations with China are under strain, entering a tense period marked by some polite acrimony.

Canberra is rattled by a rash of Chinese investment takeover proposals worth about A$30 billion (US$28.7 billion) targeting Australian mining companies. This has happened within six months of the Rudd government coming to office, leading Australian Treasurer Wayne Swan to invoke national interest in the determination of investment decisions, calling his policy “open, in the national interest.”

Of course he doesn’t name China, but the thrust is quite clear, with Beijing in such haste to not only control supplies of essential resource material but also to fix prices.

In an address to the Australia-China Business Council in Melbourne, Swan reportedly said: “Our predisposition is to more carefully consider proposals by consumers [China being the most avid consumer of Australia’s iron ore and other resources] to control existing [Australian] producing firms.”

And this is important because “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.”

Australia’s worries are two-fold. First, Canberra is uncomfortable with major investments from China’s state-controlled companies because they are an extension of national policy.

Second, arising from the first: Australia doesn’t like the prospect of ending up as China’s quarry with Beijing dictating where and to whom Canberra can sell.

With a new government in power led by Rudd, who is perceived as China’s friend, Beijing is going all out to maximize its interests. Chinese Ambassador to Australia Zhang Junsai (章均賽) is blowing hot and cold on the question of Chinese investments.

In an interview with the Australian, he urged the Rudd government to encourage “an attitude of welcome” to Chinese companies investing in Australia, and “not the other way around.”

He is making known Beijing’s annoyance at Canberra’s “discrimination” against Chinese companies wanting to invest in Australia.

Zhang maintained that, “China is your No.1 trading partner. There should be no discrimination in all of this.”

He reminded the Rudd government that China had welcomed Australian investments, with 4,000 Australian companies now operating some 8,000 different projects in the country.

But there is an important difference here. Australian companies operating in China are not state-owned or controlled. Hence, commercial interests guide their operations.

On the other hand, Chinese companies are an extension of a state apparatus where political and strategic considerations will override commercial interests if required.

Zhang, however, doesn’t buy this argument, maintaining that the Chinese companies are autonomous enterprises and not “orchestrated by the government.”

The problem, though, is that even within the interview itself, Zhang was speaking both for his government and the Chinese companies, contradicting the autonomy argument.

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