Photo: Professor On Kit Tam and other speakers at the Forum with Federal Treasurer the Hon Wayne Swan who delivered the keynote address.

Australia and China's investment relationship discussed during forum

Policy issues and implications for outbound Chinese foreign investment in Australia came under the spotlight during a high level forum on the changing global financial environment and its impact on the commercial relationship on both countries.

The faculty co-hosted the event at the Langham Hotel in partnership with the Australia China Business Council of Victoria and Lowy Institute for International Policy. Speakers at the forum included the Federal Treasurer the Hon Wayne Swan, CEO of one of China's major financial conglomerate China Merchants Finance Holdings, ANZ Bank's Senior Managing Director and experts in international and Chinese finance.

While two-way direct investment flow is small relative to the value of bilateral trade between Australia and China, the scale of outbound direct investment from China is expanding rapidly and has generated considerable policy sensitivity in Australia. Investment proposals from China for Australian resources are reported to total $30 billion since the election of the Labor Government last November.

The Federal Treasurer reiterated that foreign investment is welcome in Australia as long as it is in Australia's national interest, especially when foreign control over pricing and production may be acquired. Other speakers at the Forum argued that ownership in itself does not matter because Australia has the regulatory capacity and institutions to deal with key issues such as market competition, taxation, and transfer pricing.

The faculty's Deputy Dean International, Professor On Kit Tam spoke about the foreign investment policy implications from the changing corporate governance system being established in China's sovereign wealth fund, central enterprises and state-owned enterprises. The CEO of China Merchants Finance, Mr Hong Xiaoyuan explained how his company, with majority state shareholding, operates autonomously and commercially in pursuing profit and growth.

The Federal Treasurer also reflected on his meetings with senior Chinese Government figures on a range of strategic issues such as the progress on the Australia-China Free Trade Agreement negotiations and commented on the outlook for bilateral trade and investment.