Australia's plan to develop its north and China's Belt and Road Initiative have strong commonality and alignment, thus providing good opportunities for Sino-Australian investment cooperation: Chinese official https://t.co/78en1ZiVsW pic.twitter.com/SPVN8Cj2XB— China Xinhua News (@XHNews) November 20, 2017
Xinhua News, China
written by Xu Haijing
Monday November 20, 2017
CAINS, Australia - A high-level investment forum is being held here on Monday as part of the Australian government's effort to attract more foreign investment to develop the country's comparatively underdeveloped north.
The Northern Australian Investment Forum, the second of its kind, was inaugurated in the tropical city of Cains, where more than 500 delegates from 21 countries and regions gathered for the biannual event.
The first Northern Australian Investment Forum was held in Darwin, Northern Territory, in November 2015.
Ning Jizhe, vice chairman of China's National Development and Reform Commission, said in his keynote speech at the opening ceremony of the forum that China's Belt and Road Initiative has received positive response from the international community since it was first proposed in 2013.
So far, China has established capacity and investment cooperation mechanism with 36 countries and set up third country market cooperation mechanism with many countries including Australia.
The Australia government's plan to develop its north and China's Belt and Road Initiative have strong commonality and alignment, providing good opportunities for Sino-Australian investment cooperation, he said.
Northern Australia covers the whole Northern Territory and parts of Queensland and Western Australia. It comprises only 5 percent of Australia's 24 million population yet 40 percent of the land mass of the world's sixth largest country by area.
There are 17 million hectares of arable soil in the north. The resource-rich north also accounts for 90 percent of Australia's gas reserves.
"There is no doubt that there are opportunities from alignment between Australia's initiatives and China's Belt and Road Initiative. The Belt and Road Initiative is going to be for China a game changer. Australia is having its own initiatives that are undertaking. Clearly there are complementarity between for example Northern Australia initiative and China's Belt and Road Initiative," Steven Ciobo, minister for Trade, Tourism and Investment, said when answering questions from Xinhua at a press conference during the forum on Monday.
Ning proposed to promote China-Australia investment cooperation further in three areas: catering to the demands of Chinese and Asian market and promoting investment and development of northern Australia; taking into account the economic structural adjustment, upgrading bilateral investment; encouraging businesses to conduct third country market cooperation.
"The Australian government has big agenda in attracting investment in northern Australia. I'm sure there are many opportunities that Australian businesses and government can be partnering with Chinese businesses and the Chinese government in our shared goal of developing northern Australia," said Matt Canawan, minister for Resources and Northern Australia.
"More than 500 delegates being here is a testimony to the attractiveness and opportunities existing here in northern Australia. There is a great degree of interest in partnering with all northern Australians and the Australian government and state and territory government to the level of opportunities existed for northern Australia."
"At the government level, we put aside more than 11 billion Australian dollars (8.3 billion U.S. dollars) to invest in infrastructure, from Bruce Highway to Northern Australian Infrastructure Facility, to other strategic roads right across northern Australia. But we need to multiply that amount to really develop the North," said Canawan.
Ciobo said foreign investment into Australia is critical.
"Yes, we are a rich country. Yes, we have a strong domestic savings pool. But the fact is, if we want to reach our full economic potential, if we are going to drive the Australian economy, if we want to create jobs not only for northern Australia but across Australian economy, we must have foreign investment. That's consistent with our national interest to make sure our country can reach its full potential."
The forum lasts two days and will end on Tuesday.
Canawan said the first forum did lead to the investment in Darwin Port and investment in the Ord River agriculture district in Western Australia.
"We are hopeful we are getting similar outcome from this conference today."
HKTDC Research
written by Saul Eslake, Independent Economist, and Vice-Chancellor’s Fellow, University of Tasmania
November 30, 2017
What does the ‘Belt and Road Initiative’ mean for Australia?
As is readily apparent from any of the maps depicting the ‘Belt and Road’, Australia isn’t on it. Nonetheless, as President Xi Jinping said in his address to the Australian Parliament in November 2014, “Oceania is a natural extension of the ancient maritime Silk Road, and China welcomes Australia's participation in the 21st century maritime Silk Road”.
The ‘Belt and Road Initiative’ is thus of considerable potential interest to Australia, from a number of perspectives, including opportunities for Australian businesses arising from infrastructure and other projects in countries which are formally on the ‘Belt’ or the ‘Road’, and Chinese involvement in infrastructure projects in Australia which may complement various aspects of the ‘Belt and Road’ initiative.
Australian firms have considerable expertise in areas such as the design, construction, financing, and management of infrastructure projects and operations for which there are likely to be profitable opportunities arising from ‘Belt and Road’ projects in Asia and Europe. Education and training in the skills required for these areas may be another area of opportunities for Australian institutions and businesses.
Opportunities for Australian firms to participate in ‘Belt and Road’ related projects in China itself should in some cases be enhanced by the market-opening provisions of the China-Australia Free Trade Agreement. However, both within China and especially in other ‘Belt and Road’ countries where Australian firms do not have any significant established presence, opportunities for Australian firms are more likely to be enhanced by more formal collaboration with Chinese firms.
The other important dimension of the ‘Belt and Road Initiative’ from an Australian perspective is the extent to which it may incorporate infrastructure projects within Australia. Australia needs to invest a lot in infrastructure, both to make up for past under-investment, especially in urban transport, or mis-directed investment, especially in energy; to capitalize on emerging new technologies; and to facilitate new opportunities for international trade, including with China.
As a capital-intensive economy with a relatively small population spread across a very large geographical area, Australia has been partially reliant on foreign capital to meet its investment requirements ever since the commencement of European settlement. What has changed over time is the origin of that capital – from Britain and other European countries until the 1960s, then from the United States and Japan, and more recently from other Asian countries, including China, and the Middle East. According to the Australian Bureau of Statistics, Chinese investment into Australia totalled A$87.3bn at the end of 2016, of which almost $42bn was direct investment (as opposed to portfolio investment in shares and bonds)17. Data compiled by KPMG and the University of Sydney puts the cumulative value of Chinese direct investment between 2007 and 2016 into Australia at US$89bn18 – equivalent to almost A$120bn at current exchange rates. An increasing proportion of this investment – 28% in 2016 – has been in infrastructure (in particular, seaports).
Infrastructure investment raises particular political sensitivities in Australia because, although Australia has always been a predominantly capitalist economy, the provision of transport and energy infrastructure has historically been undertaken by government departments or state owned enterprises (as is also the case in China). The movement towards greater involvement of private enterprises and investors, whether Australian or foreign, in the provision and operation of infrastructure assets, has not been without numerous difficulties: many Australians feel, rightly or wrongly, that the result of ‘privatization’ has been higher prices and inferior standards of service, the opposite of what had been promised19. Many Australians resent the fact that investors from countries which don’t permit foreigners to purchase land, businesses or other assets are nonetheless allowed to do so in Australia20. The fact that these differences in foreign investment policy may reflect different political systems, or a polar opposite balance between domestic saving and investment, does not usually persuade Australians who hold these views to a different opinion.
These and other sensitivities have to be borne in mind when evaluating Australia’s response to the ‘Belt and Road Initiative’ – just as Australia has had to be mindful of, for example, Chinese sensitivities when pursuing greater access to Chinese markets during negotiations over the China-Australia Free Trade Agreement.
In particular, Australia’s response should not be influenced by fear – either of China’s purposes in promoting the ‘Belt and Road’ Initiative, or ‘fear of missing out’ (FOMO) on business opportunities in China, and Chinese investment in Australia.
There would seem to be little reason for concern if Australia were to sign a ‘memorandum of understanding’ similar to the one agreed between China and New Zealand earlier this year.
That Memorandum provides for both sides to “respect each other’s interests and major concerns to deepen mutual trust”, to “maintain and enhance existing bilateral co-operation and multilateral mechanisms”, and to “promote practical co-operation in areas of mutual concern”.
It provides that China and New Zealand will “carry out senior-level dialogue and promote communication” on macro policies and development strategies”, including as to “how they will best support the Belt and Road Initiative in line with [their] comparative advantages”; it includes a numerical target for the value of two-way trade by 2020 and a commitment to “conduct mutually beneficial co-operation” in a number of fields, including infrastructure, agricultural technologies and clean energy; it provides for “cultural exchanges”, including specifically in film and television”; and it commits both countries to “enhanced cooperation” in various multilateral fora including APEC, the AIIB and the Pacific Islands Forum”. The agreement is effective for five years, and will be renewable automatically every five years thereafter, subject to three months’ notice of termination by either country.
A similar understanding between Australia and China would likely be beneficial for both countries. From the standpoint of Australian businesses, it would serve to indicate that their participation in ‘Belt and Road’ projects has the formal endorsement of the Australian Government, and it would be a signal to Chinese businesses that participation by Australian partners in such projects is welcomed by the Chinese Government. That is likely to be helpful in pursuing business and investment opportunities.
However, more specific commitments – in particular, the designation of any specific projects in Australia as part of the ‘Belt and Road’ – would need to demonstrate ‘win-win’ characteristics that would be readily evident to both sides. They should be negotiated on a case-by-case basis, with sufficient time for the claimed benefits to be properly evaluated and any costs to be assessed.
In that context, it would probably assist in enhancing mutual understanding if Australia were to make clearer the criteria by which decisions regarding foreign investment are made – both in advance, and in explaining the reasons for particular decisions. As an Australian citizen, I am not satisfied by a mere declaration that a particular foreign investment proposal is ‘contrary to the national interest’, without at least some attempt being made to explain why – and I would imagine that foreign investors would feel much the same.
The ‘Belt and Road’ Initiative has the potential to be a major influence on the economic, political, social and cultural evolution of not just Asia, but a large part of the world, over at least the next three decades. Australia should want to be part of it – but for that to be sustainable it needs to be on terms that recognize and advance Australia’s own interests, and which resonate with the Australian people.
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