Saturday 30 May 2020 | 06:42 | SYDNEY
Saturday 30 May 2020 | 06:42 | SYDNEY

China and foreign investment


Malcolm Cook

2 December 2009 08:09

Looking closely at Fergus' poll numbers on foreign takeovers by state-owned firms into Australia and into the People’s Republic of China, three things occur to me. One is good for China's integration into the world, one is bad for Western integration with China, and one is bad for Northeast Asian harmony and Prime Minister Hatoyama's dream of an East Asian community centred on Japan and the PRC.

On the good side, Chinese respondents seem genuinely more supportive than Australians of foreign state-owned firms investing in their homeland. When it comes to Singapore (note to Singapore Inc.), a majority of Chinese were in favour while a plurality was in favour of such investment from Canada (note to Alberta’s Heritage Fund).

In the case of the Australians we polled in 2008, majorities opposed investment of this type from each country listed as an option. Australians were the least cool towards state corporations from the UK, but even then 53% were opposed and only 43% were in favour. The US followed with 63% and 34% respectively. I wonder if this shows a warmer attitude in China towards foreign investment in general, or if it is simply that they are more familiar and in favour of state corporations?

On the bad side, both Australian and Chinese respondents reflect the long-held view that cultural factors shape attitudes towards investment. Australians favoured investment from Western countries followed by the most 'Western' countries in East Asia (Singapore and Japan). The less familiar UAE and People’s Republic of China brought up the rear.

Chinese respondents were most in favour (56% in favour and only 34% opposed) of investment from Singapore. However, Chinese were very cool on state-controlled investment from the US, China's largest trading partner, with 70% opposed and only 20% in favour.

On the bad side for Northeast Asia, the only exception in the China poll to the above point about cultural affinity was Japan, China's largest source of imports. Chinese respondents were the most opposed to Japanese state-owned investment, with 79% against it and only a brave 14% in favour.

Chinese attitudes towards Japanese investment also contradict the first point about China's greater openness to foreign state-owned corporations acquiring local firms. In 2008, the People's Republic of China scored the lowest when it came to Australian support for foreign investment by state-owned corporations, with 78% opposed and only 17% in favour; that's a slightly higher result than Japan received in the China poll.