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Wednesday 23 Aug 2017 | 03:10 | SYDNEY
Wednesday 23 Aug 2017 | 03:10 | SYDNEY

The Lowy Poll: An economist's view

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COMMENTS

2 June 2010 13:09

The Lowy Poll always provides plenty to chew over. Here are three thoughts on our latest poll.

First, this year's poll suggests Australians are even less keen on Chinese investment in Australia than they were last year: 

This provides a bit of indirect reinforcement for a point I've made in the past about Australia's foreign investment regime: despite some drawbacks, the national interest test along with the FIRB and the rest of the framework also deliver some important political benefits. In particular, they help reassure sceptical voters that foreign investment really is in the national interest. Australia has even been able to deliver some modest liberalisation while other countries consider tightening their foreign investment regimes.

Second, the results on the world's leading power — 55% said it was China. As Fergus Hanson wrote on Monday, 'that in no way reflects IMF data which still puts the European Union and the US well ahead of China, measured in both purchasing power parity and US dollar exchange rate terms.'

As I posted back in February, Australians aren't the only one ones to ignore the GDP numbers and assign China the top spot: confidence and sentiment clearly matter. Another part of what's going on here is the poll is picking up the substantial growth in relative influence that China now has on the Australian economy: remember, last year total bilateral merchandise trade with China was worth about A$78 billion, or more than twice the A$32 billion of trade with the crisis-hit US.

And although the US continues to be a far more important foreign investor in Australia than China, the high-profile debates over Chinese foreign investment have meant that the latter has been a much more visible investor over the past two years. 

Finally, there is the difference between influence on average, and influence at the margin. Yes, the US economy remains much bigger than the Chinese one. But if you take a look at the current drivers of global growth (see left), you get a different picture.

Last, like Fergus, I was struck by the response of younger Australians to the question about Australia's place in the world. One problem with polling is interpreting what underlies the various answers: so a cynic might suggest that the high 'not really part of any region' response just reflects some uncertainties about geography. But there are more intriguing possibilities. 

For a start, the polling confirms that the old debate as to whether Australians see themselves as some kind of European outpost is long over. For older Australians this seems to have been replaced by a greater sense of being part of Asia. But this sometimes appears to be manifested as a kind of nervousness about being 'left out' of the Asian region (hence Canberra's desperate keenness to be involved in any version of the regional architecture that will have it, as well as to invent new bits whenever there's an opportunity). 

I wonder whether the different response of younger Australians to this question might signal that a younger generation has a bit less fear about being 'left out', perhaps a bit more (self-)confidence about Australia's own position, and hence a greater willingness to define Australia in its own terms – maybe in part a product of two decades or so of relative economic and social success?

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