Short term impact won't affect long-term growth potential: experts
Although Chinese companies seeking growth in Australia face increasing challenges posed by local authorities, the economic and trade tie between the two countries will remain healthy over the long run, even as some short-term impacts linger on, experts said Sunday.
The comments came after media reported that Australia on Thursday made a preliminary decision to reject the A$10 billion ($7.7 billion) sale of Ausgrid, its biggest energy grid, to China's leading power distributor State Grid Corp and Hong Kong's Cheung Kong Infrastructure Holdings citing security concerns.
Earlier in April this year, Australia turned down a A$371 million bid by a China-led consortium looking to buy the cattle ranch S. Kidman & Co.
"The recent refusals from Australia will not have a negative impact on Chinese enterprises' enthusiasm for their investment in Australia from a long-term perspective, but the economic and trade relations between the two countries will be affected to some extent for a short period of time," Zhuang Rui, deputy dean of the Institute of International Economics at the University of International Business and Economics (UIBE), told the Global Times on Sunday.
According to Zhuang domestic companies are encountering more and more obstacles when it comes to expanding in Australia, such as an increase in the access threshold for Chinese capital.
Even after Chinese firms successfully buy Australian assets, their operations are likely to be restricted, Zhuang said.
"Under such context, some Chinese companies will transfer their investments in certain industries to other countries and regions across the globe instead of continuing to invest in Australia," she noted.
An increasing number of domestic companies have been eager to go global in recent years, but many Western countries and regions worry that large scale investment from China will disturb the local markets, according to experts.
"Moreover, countries like Australia are concerned about companies backed by the Chinese government, which they think run counter to the market economy and the level playing field they have long promoted," noted Zhuang.
Ongoing cooperation
Australia chose to block the deal out of its own interests, which also involves some political factors, Zhang Jiayuan, an analyst with China Investment Consulting Co, told the Global Times on Sunday.
The tension between the two countries has recently increased. In July, Australia warned China to heed the Hague's ruling on the South China Sea dispute.
Despite tensions, the economic demands from both countries are dependent and the bilateral business cooperation between China and Australia will continue to see sound prospects in the future, experts said.
On one hand, China needs the cooperation with Australia since it brings in large amounts of imports such as iron ore from Australia each year, according to Zhuang, deputy dean at UIBE.
On the other, Australia is eyeing China's large market and will welcome Chinese investment, Zhuang noted.
"Chinese capital is likely to go into sectors in Australia including real estate, tourism and the development of natural resources," Zhang said, noting that in the last two years domestic companies have also stepped up efforts to expand into sectors like healthcare.
China is now the largest trade partner as well as the largest export market for Australia.
In the first half of 2016, Australian exports to China amounted to $30.6 billion, with iron ore, agricultural products and coal as the top three export products, data released by the Ministry of Commerce (MOFCOM) on July 19 showed.
In 2015, China imported more than 600 million tons of iron ore from Australia, accounting for 63.7 percent of the country's total import of the product, according to MOFCOM.
With the gradual implementation of the China-Australia free trade agreement, which took effect on December 20, 2015, there is great potential for bilateral trade and business, Shen Danyang, spokesperson of the MOFCOM, stated at a press conference in July.
