Australia should see trade and investment ties with China in a positive light and promote sound development of the diplomatic relationship, as well as send a high-level delegation to attend the second Belt and Road Forum for International Cooperation to be held in Beijing later this month, Chinese analysts said on Tuesday.
The comments followed a report by KPMG on Monday showing a sharp decline in Chinese investment to Australia against an overall rising trend of Chinese overseas investment around the world.
Chinese investment to Australia dropped a sharp 37.6 percent to $6.2 billion in 2018, its lowest level since 2011, the report said.
A marked decline in the willingness of Chinese state-owned enterprises to invest in Australia and the fact that much of the money allocated for the Belt and Road Initiative (BRI) was shifted to countries in Asia and Europe were behind the declining trend, media reported on Monday, citing Doug Ferguson, a partner at KPMG and author of the report.
Ning Tuanhui, an assistant research fellow with the China Institute of International Studies, told the Global Times on Tuesday that declining Chinese investment showed that Australia’s investment environment has somewhat deteriorated and will be negative for Australia to sustain its economic growth.
Experts pointed out that a robust trade relationship with China is one of the important reasons why the Australian economy has not experienced a recession for the past 27 years.
Relations between Australia and China have soured since the country accused China in late 2017 of meddling in domestic affairs. A member of the Five Eyes intelligence alliance, Australia has been under US influence in taking a stern approach to Chinese telecom equipment providers. Australia in August 2018 blocked Chinese telecommunication giant Huawei from supplying 5G equipment.
“Since 2017, the unfriendly atmosphere in Australia has dented the enthusiasm of Chinese investors and increased scrutiny by regulatory bodies that screen Chinese investments. This has increased costs for Chinese investors,” Ning said, analysing the reasons for the decline.
Amid strained political ties, the growth of Australia’s trade with China also shrank by more than two-thirds in 2018.
On January 23, China’s General Administration of Customs released figures showing that Australia’s trade with China stood at 1 trillion yuan ($149.3 billion), up 8.9 percent year-on-year. The growth rate was nearly 30 percent in 2017, when a free trade agreement boosted bilateral trade and sent the figure up 29.1 percent to 923.41 billion yuan.
The strained diplomatic relationship is behind deteriorating trade and investment ties, Ning said, arguing that Australian authorities should try to perceive the China-Australian relationship in a positive light and cast a positive influence on Chinese investment to Australia.
Experts said the BRI could be one of the platforms to enhance such ties.
“The BRI is a very large platform for cooperation. Australia should actively participate and seek more cooperation opportunities for Australian companies. The longer Australia stands outside the doors of the BRI, the more opportunities it will lose. Therefore, Australia should also send high-level officials to participate in the second Belt and Road Forum,” Ning said.
In March, Italy officially became the first member of the Group of Seven major developed economies to formally join the BRI. In 2018, the Australian state of Victoria signed a BRI memorandum of understanding with China.
Victoria remained in second position with 27 percent of total investment value from China in 2018, trailing New South Wales’ 53 percent.
Lin Boqiang, a professor at Xiamen University in East China’s Fujian Province, told the Global Times Tuesday that energy trade between China and Australia will not be affected by diplomatic relations.
Australia is a major exporter of liquefied natural gas (LNG) to China and China currently imports about 42 percent of Australia’s LNG overseas shipments.
“If Australia attends the second Belt and Road Forum, the bilateral relationship will be improved and there won’t be too many changes in the energy trade of the two countries,” Lin said.