A Chinese government crackdown on offshore property deals will be widely felt in countries including Australia, says Trade Minister Stephen Ciobo.
Chinese companies have been the biggest source of new foreign investment in Australia for the past three years, driven by real estate purchases.
But a week ago China’s State Council issued a list of restricted overseas investments, which included real estate and hotels, as officials slammed “irrational investments” by Chinese private companies.
Speaking in Beijing on Monday, Mr Ciobo said: “The impact will be widely felt across a number of countries in which Chinese SOEs (state owned enterprises) and private businesses invest.”
He said it was his view that the Australian government needed to be pragmatic in its response, and ensure it attracted investment from other countries.
“It is not for the Australian government or indeed any government to dictate to the Chinese which sectors they should or shouldn’t be allowed to invest in, pursuant to their domestically imposed capital controls,” he said.
Mr Ciobo said foreign investment in Australia was “highly diversified”, with the United States as the biggest single investor, and “strong pipelines of investment” from Singapore and the United Kingdom.
“Yes, China is a player in this space, but what will ensure the Australian economy deals with this well is the fact we have a very diversified investment base, which means, as the old saying goes, we don’t put all our eggs in one basket.”
According to the Foreign Investment Review Board, although the United States was the largest holder of direct investment stock in Australia last year, followed by Japan, China has been the biggest investor of new money for several years.
Approved Chinese investment was worth $47.3 billion last year, FIRB’s annual report shows.
Mr Ciobo and all state and territory tourism ministers were in Beijing to hold their first joint meeting outside of Australia, to mark the significance of China as an inbound tourism market.
The growth of the tourism industry has “played a critical role in the last couple of years in balancing the Australian economy,” he said.
China is set to overtake New Zealand as the largest source of international tourists, according to Tourism Australia.
Last year 1.25 million Chinese tourists visited Australia, up 10 per cent, and spent on average $8000 per trip, significantly more than the international visitor average of $5000.
Chinese spending accounts for a quarter of all international tourist dollars spent in Australia.
Tourism Australia signed a deal with China’s largest payment card, Union Pay, that will allow it to market to Union Pay’s customer database to draw more visitors.
Western credit cards are little used in China. While Union Pay is accepted at 90 per cent of Australian automatic teller machines, the Chinese consumer is swiftly moving to mobile phone payment systems that are yet to take off in Australia.
Tourism Australia managing director John O’Sullivan said it was crucial for tourism operators to offer trusted and convenient payment systems to Chinese visitors.
“We know that being able to make mobile payments is also a big thing for Chinese tourists. The two key players in the market, Wechat pay and Alipay, are both present in Australia and building their footprints. The opportunities for future expansion are enormous and something Tourism Australia is certainly keen to help facilitate,” he said.
Mr Ciobo also discussed a Chinese moratorium on beef from six Australia suppliers, over a labelling error, with authorities.
By Kirsty Needham
Sydney Morning Herald