[LINK] The Deal Is Simple. Australia Gets Money, China Gets Australia
tomk at unwired.com.au
Tue Sep 7 01:14:59 EST 2010
Interesting article in this weeks Businessweek.
The Deal Is Simple. Australia Gets Money, China Gets Australia
How's that supposed to make a country feel?
It's five pages, so I shan't quote it verbatim.
Direct investment has been politically charged, with Chinese bids to
take over or increase their shares in miners such as Rio Tinto and Oz
Minerals blocked by management and the government, respectively. (A
portion of Oz Minerals was purchased in June 2009 for $1.35 billion,
however.) The Australian Foreign Investment Review Board has issued
guidelines suggesting that Chinese direct investment in Australian
companies remain below 50 percent, but no such law has been passed. This
has not harmed Chinese financing. In June the China Development Bank
signed a $1.1 billion loan facility for the $1.8 billion Karara iron ore
project in Western Australia, developed by Australia's Gindalbie Metals
and China's Angang Steel, as well as deals to fund Aquila Resources'
A$5.8 billion West Pilbara iron ore project and Fortescue Metals'
various Pilbara iron ore projects.
The consequences of a A$6.6 billion trade surplus with China are evident
on Australia's streets as much in what is unseen as what is seen: There
are no dole lines, no rash of real estate foreclosures, and little of
the social unrest that has followed economic downturns elsewhere.
Politically, China treats Australia as a serious partner. Three of its
politburo standing committee members have visited Australia in the past
15 months, including Vice-President Xi Jinping in June, who noted the
"advancement of the China-Australia relations at large." Talks are under
way for a free-trade agreement, and an annual Australia-China Strategic
Dialogue has been inaugurated.
Economic and diplomatic advances, however, have not fueled a warm
In the markets, speculators, unable to bet on a yuan pegged to the U.S.
dollar, use the currencies of China's main trading partners instead.
That has helped make the Australian dollar the fifth-most-traded
currency in the world-after the U.S. dollar, the yen, the pound, and the
euro-even though Australia is the 18th largest economy. It has also made
it more volatile. In May it fell by almost 10 percent in one day when
traders sold it as a proxy for China, after Chinese growth forecasts
In June, Wiltshire was one of many locals surprised to see the Sino mine
project in the Pilbara advertise for riggers, crane operators, and
fitters who speak Mandarin. As an unhappy union official named Joe
McDonald put it: "The only bloke I know who can speak Mandarin is Kevin
"We've seen it before in the 1980s, when Japanese companies brought in
Japanese-speaking workers. When the Japanese economy busted and they
pulled out of Australia, they left nothing for the local workforce."
"We were at a town meeting the other day when a representative from a
mining company said, 'Come on, we're all up here to make a dollar.' The
locals in the room looked at each other and thought, 'What?' We live
here. We can cope with the hot summers. We're here for the long term. We
are actually better for the multinationals than the contractors they fly
in and fly out. We just need them to wake up to the fact that they, and
we, are all in it for the long haul."
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