Australia’s tourism industry could be hit by new Chinese government restrictions on companies investing overseas, the Turnbull government fears.
The Chinese government ban on “irrational” overseas investment by private Chinese companies, and move to put property and entertainment deals on a restricted list, could hit Australia’s tourism and hotel sector, according to Treasurer Scott Morrison, who has sought clarity around the issue in a high-level meeting in Beijing.
Around 1 million Chinese tourists visit Australia each year, and are soon expected to overtake New Zealanders as the largest group of international visitors. But there is a shortage of hotel rooms in major cities.
Former trade minister Craig Emerson says Australia also needs better tourism facilities outside Sydney to cater to Chinese tourists.
Treasurer Scott Morrison Photo: Alex Ellinghausen
Chinese companies were the largest group of foreign investors in Australia last year, with most deals in the property sector.
Mr Morrison has told his Chinese counterpart, He Lifang, chairman of China’s National Development and Reform Commission, that Australia would like to see Chinese investment in Australia continue.
“We highlighted that where there has been an extraordinary growth in Chinese visitation to Australia that often is accompanied by increases in investment from those source countries and there can be some real synergies in that. We highlighted the value of that to our economy,” Mr Morrison said after meeting Mr He.
“They have a separate set of issues with protecting their foreign reserves and the outflow of capital. They have their reasons for doing that and its not for me to make judgements.
Coal carriers are loaded near Mackay. Australian exporters are sure to be hurt by China’s current go-slow. Photo: Bloomberg
China’s demand for coal may be set to drop as the Chinese government rationalises outdated and polluting steel operations. But the Australian government says it has been told there would likely still be demand for higher quality Australian coal.
Coal is Australia’s second largest export to China, its largest trading partner. Australia’s largest export to China is iron ore, which is used in steel making.
Trade Minister Steven Ciobo raised the issue of Australian coal being reportedly being delayed at Chinese ports, amid speculation there was a deliberate import slowdown, with China’s commerce minister Zhong Shan.
“China spoke about their rationalisation of excess output from their steel and coal operations. China indicated their desire to appropriately balance global expectations for rationalisation with their own domestic needs with regards to the hundreds of thousands employed in the sector,” Mr Ciobo, also in Beijing, said.
He said Australia would continue to discuss the issue with Chinese officials, adding “China specifically noted that Australian coal is of very high quality.”
Mr Morrison denied this meant demand for Australian coal would fall.
“In both of those sectors [steel and coal] Australia has a unique position because of the quality of the ore and the commodities we are providing.”
There was no resolution to a moratorium on six Australian beef processors exporting to China, which China said was prompted by a labelling error.
Mr Ciobo said he was told Chinese authorities were looking at a report the Australian agriculture department had provided. “A resolution should be arrived at in the not too distant future,” he said.
Australia signed on to China’s signature foreign trade and investment policy, the Belt and Road Initiative (BRI), by signing a memorandum of understanding on cooperating in third-party countries.This would encourage Australian companies to bid for Belt and Road projects in Africa and Asia, for example.
It could also allow these companies to access the billions of dollars in concessional loans being extended by Chinese banks for BRI projects.
The federal government earlier declined to align development projects in northern Australia with China’s BRI, and hasn’t sign an agreement for direct participation.
By Kirsty Needham
Sydney Morning Herald