Eva O’Dea is a Research Associate in the Lowy Institute’s East Asia Program.
Australia has ‘tarnished’ its reputation for policy stability in recent years through mismanagement and miscommunication over the introduction of the Minerals Resources Rent Tax and carbon pricing, according to Andrew Michelmore, CEO of MMG Limited and Chairman of the Minerals Council of Australia.
Michelmore presented the Lowy Institute’s tenth anniversary China Changing Lecture in Beijing today, the first event to be held by the Lowy Institute in China.
Michelmore said a policy environment that facilitates growth, supported by a ‘far-sighted free trade agreement’ with China, is needed. As CEO of MMG Limited, which is majority-owned by the state-owned China Minmetals Corporation, Michelmore has been at the forefront of the evolving Chinese-Australian investment relationship.
Chinese investment in Australia has grown substantially in recent years. However, in stark contrast to popular conceptions, as of 2012 it made up only 3% of Australia’s total stock of investment. According to Michelmore, community caution over Chinese investment mirrors early responses to US and Japanese investment in Australia. He expects attitudes to Chinese investment to follow a similar path towards acceptance.
Michelmore also discussed the sources of, and challenges to, Australia’s competitive advantage as a destination for Chinese investment. While Australia’s stable economy and legal system, open and transparent markets, infrastructure and skilled workforce have made it attractive, the challenges of high costs, restrictive labour practices and conflicting messages from government need to be managed.
Photo courtesy of MMG.