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China no threat to Australian investment in Africa – K Rudd

Thursday, August 30, 2012
AFRICA DOWNUNDER: Perth - Australia has enjoyed its time as China’s resources mistress but the emergence of Africa has given our biggest commodities customer reason to stray.

China took over from Japan as Australia’s largest trading partner in 2009, right in the middle of the iron ore-led resources boom.

In 2005/06 the dollar figure placed on approvals for Chinese investment in Australia’s mining sector sat at $6.8 billion.

By 2009/10 that number had almost doubled, hitting $12.2 billion.

The future for the Australian / China relationship appears rosy enough, although there could be a few bumps in the road ahead.

Fear of growing Chinese investment in the resources and agricultural sectors will keep the Foreign Investment Review Board busy as they assess each deal on its merits.

It has been mooted that the cooling down of the Chinese economy may result in a weakening for the demand of Australian resource exports.

Any concerns on this front should be allayed once people understand that the Chinese economy may slow but it is not predicted to go backwards, which means it will still be at the levels that created much of the demands we are currently trying to meet.

If industry observers consider there may be a possible Sino-induced threat to the future health of the Australian industry their fears are not shared by former Prime Minister / Foreign Minister and Member for Griffith Kevin Rudd.

 

“Australian investors succeed in the international market place based on the quality of what they have to offer and the price they offer,” Rudd told journalists gathered to ambush him at the Paydirt Africa Downunder conference in Perth.

“We have done that against American miners, Canadian miners, European miners; they’re doing it against Latin American miners out of Brazil, out of Chile.

“And we succeed on the basis of the competitiveness of our bids.”

For the benefit of those who may not have heard of Africa, it is the second largest continent on the planet, consisting of, at last count, 55 different nations.

If you were to take a pair of scissors to your atlas you could arrange the countries of the United States, India, a good chunk of Europe, and China to fit within the continent’s coastline.

Economically, Africa has been on the move boasting six of the world’s ten fastest growing countries over the last ten years.

Eight of these past 10 years have seen Africa enjoy economic growth of a greater rate than that of East Asia.

China has been spending like a sailor on shore leave in Africa as it works to develop what is coming to be in global terms, one of the most important economic relationships of the century.

This is obvious by the amount of Chinese investment pouring into Africa since 2008 when around 800 Chinese companies were operating there.

That figure has exploded to over 2000 with an estimated one million Chinese people now calling Africa home.

The influx of people and resource and infrastructure investment has placed China as Africa’s largest trading partner.

According to The World Bank around two-thirds of Africa’s 55 nations have financial agreements in place covering the development of infrastructure.

Currently oil and gas receives the greatest amount of attention with 19 per cent of the total Chinese spend.

However, iron ore, copper, uranium, and gold are all travelling around the economic landscape under different umbrellas.

Once they are added up as one figure, along with all other Chinese backed mining activity the number hits an impressive 27.3 per cent.

As vast as the inroads China has made in Africa, Australia has also been busy.

The Department of Foreign Affairs and Trade (DFAT) tells us that the committed and planned investment by Australia companies in resources projects totals more than $20 billion.

DFAT figures also show Australia’s trade with Africa to have undergone steady growth over the last decade achieving an average rate of 6.1 per cent.

Australia’s total merchandise trade with Africa was valued at $5.8 billion for the year 2009/10.

Currently there are over 230 Australian companies working up some 650 mining projects across 42 countries in Africa.

Rudd told his fourth estate audience the good health of the industry was demonstrated by the fact there are more than 200 Australian mining companies participating in so many African projects.

“It’s because the good folks in Africa think we have something to offer,” he said.

“I believe in a competitive environment, always have believed; and I think the Australian industry has done well.

“And I believe that when it comes to working in the future there is a whole lot more that Australia and Africa can do together without creating any third country friction with anyone else, including China.”