Australia-China Relations Institute aims to bust the myths about Chinese investment in Australia

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Australia-China Relations Institute aims to bust the myths about Chinese investment in Australia

By Kelsey Munro
Updated

Fears about Chinese investment in Australia naively exaggerate the amount of control the Chinese government has over Chinese corporations, according to an optimistic and controversial new report that seeks to "mythbust" public and media views about how Chinese business operates.

It is not true that all Chinese companies are controlled by the Chinese government, or that a unified "China Inc" carries out strategic goals with the ultimate aim of global domination, according to the report by the Australia-China Relations Institute at UTS.

But its arguments have been rubbished by security expert Peter Jennings from the Australian Strategic Policy Institute as "not credible".

Chinese investment in Australia's property, agriculture, infrastructure and energy sectors has become a highly sensitive political issue, particularly since the 2015 lease of the Port of Darwin to Landbridge, a company with alleged links to the Chinese military, sparked an overhaul of the Foreign Investment Review Board's operations.

How much control does the Chinese government have?

How much control does the Chinese government have?Credit: Rolex Dela Pena

The event forced the federal government to navigate the schism between the business community – focused on bullish Chinese growth opportunities – and the foreign policy debate which viewed Chinese investment through the prism of strategic risk and potential threats.

The CCP 'know what they are doing' and act in unison

The new report, "Myth-busting Chinese Corporations in Australia", questions the evidence for Communist Party control over Landbridge, Huawei and other Chinese-linked companies which have sought to make large investments in Australia.

It argues that the Communist Party is far too preoccupied with internal disorder, factional division and corruption to "create a unified strategy to control commercial businesses or exert a coherent covert influence through those businesses overseas".

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The report's author, Associate Professor Colin Hawes, is an international law expert and the author of a book on Chinese corporate governance.

It was released Thursday by the Australia-China Relations Institute at UTS, which has been criticised for its "unashamedly positive and optimistic" framing of the bilateral relationship.

Last year its chairman and founder Huang Xiangmo resigned to address the perception of "supposed Chinese influence" over the think tank which was set up with a $1.8 million donation from the Chinese businessman and prolific political donor in 2014.

All Chinese companies are controlled by the Chinese government

Professor Hawes argued it is misleading to equate state-owned enterprises and private Chinese firms, saying that for example at Huawei, the private telco giant that was refused permission to invest in the National Broadband Network, there is no Chinese government role in appointing executives.

"It is naive to over-simplify the diverse and complex contemporary Chinese economic reality and to assume that everything a Chinese corporation does must be primarily for the benefit of the Chinese government's strategic and military expansion," the report said.

Private Chinese corporations are actually controlled by the CCP

He conceded that most large Chinese companies have internal Communist Party branches, but said this was usually for the benefit of the business, not the party, and did not equate to having centralised government control over the firm. Examples of crony communism, where officials leaned on firms for private benefit "is a very different kettle of fish from helping to promote the CCP's strategic priorities".

China is taking over the world

The report notes a 32.9 per cent increase in Chinese investment in Australia to about $15 billion in 2015, mostly in commercial real estate, followed by energy, healthcare, mining/infrastructure and agriculture; but said that Chinese investment is still dwarfed by that from the US and is lower than that from smaller countries such as Belgium.

Chinese investment is a threat to Australia's national security

He was critical of "hawkish" commentators for feeding "popular suspicions and fear of the foreign and unknown" and fostering "a paranoid atmosphere".

But one of those critics, Peter Jennings from the Australian Strategic Policy Institute, said the report was misleading in its suggestion that the Chinese government has "no ability to direct Chinese business to broader national purposes".

"It is very clear that a high priority of Xi Jinping is the One Belt One Road strategy, which is about promoting Chinese infrastructure business overseas," Mr Jennings said. "Companies will tie themselves into that OBOR strategy in order to get finance from the Chinese banking system. Evidence of that is visible from Darwin all the way to the Indian Ocean.

"Everything we see coming out of ACRI is this one-eyed attempt to tell the 'good news' about China, it is not to be treated as a credible research body."

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It comes two days after Foreign Investment Review Board chairman Brian Wilson appeared to concede the political sensitivity of the issue to the Australia-China Business Council, advising his audience of Chinese investors to avoid Australian "icons", according to reports in The Australian.

The warning sparked Labor Senator Kathy Gallagher to accuse the Chairman of casting doubt on the objectivity of the FIRB's processes.

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