Chinese direct investment in Australia: public reaction, policy response, investor adaptation

China’s overseas direct investment (ODI) in Australia has attracted adverse public
reaction, similar to the reaction to Japanese investment in the late 1980s. Publicly
aired concerns focus on Chinese ODI which is predominantly from state-owned
enterprises and is perceived as a risk to Australia’s control over its wealth-creating
assets. This perception is exacerbated by a lack of understanding of the institutional
environment within which China’s state owned investors operate and the scale of
investment.
The current Australia—China investment relationship has involved an awkward
interaction between public reaction, policy response in Australia, and adaptation by
Chinese investors and institutions. Adaptation by Chinese investors has seen
increased attempts to gain local legitimacy but has also potentially diverted largescale
resource investments to other resource rich countries such as Guinea and
Mongolia.
Resolution of this reaction, response and adaptation process will require a deeper
bilateral policy dialogue and increased investment transparency from state-owned
investors and the related institutions on both sides.