Business
China’s Change In Foreign Investment Policy Could Affect Australia
Following several failures in projects and investments that resulted in the loss of billions of dollars, including two high profile deals made in Australia, the State Assets Supervision and Administration Commission have released a new ruling that could have great impact in Australia’s resources sector.
The new ruling, which takes effect immediately, puts a stronger hold over state-owned enterprises and will make executives accountable for investments made overseas. The Chinese commission is demanding a more thorough risk management when it comes to overseas investments.
The Chinese entered into one of its largest investment projects in Australia with CITIC Pacific Sino Iron, which reportedly racked up $7 billion from its initial $2.5 billion estimate. The project has been marred by delays and other problems.
A second project involving Sinosteel Midwest was pegged at $2 billion but was stopped in 2011 after several investment failures in Western Australia. The head of the company lost his job as a result.
Australia has been a chosen investment ground for China since it initiated overseas business relations in 2003. The government has approved more than $70 billion worth of projects since 2007.
Investors who failed in Australia are more likely to put the blame there. Some fear this can affect other potential business relationships, especially if more bad investments by China continue. The difficulties can affect bilateral relationships between these two nations, as a whole.
Meanwhile, the Chinese government can look at Minerals and Metals Group as a shining example of good investment in Australia. Since 2009, the company has been an asset to trade relations with Oz Minerals and its business deals in Australia continue to be successful.
