There is no controversy in Australia that is more based on outright disinformation than the issue of Chinese foreign investment. For years dramatic newspaper and television news headlines have told the Australian public that China is buying the country up wholesale. Ironically, none is more breathless than the online Daily Mail, a British newspaper, which on 1 December 2019 for instance proclaimed: “From farms and coal mines to airports and water supplies: How China is gobbling up millions of acres of land, vital infrastructure and companies—as part of its ‘disturbing’ plan to exert greater influence and control over Australia”. A Lowy Institute poll in 2019 recorded that 68 per cent of Australians say the government is “allowing too much investment from China”, which is up from 50 per cent in 2009. LNP Member for Dawson George Christensen has established what he calls a “China Inquiry” into “Diversifying Australia’s Trade and Investment Profile”. Christensen’s website chinainquiry.com.au states: “Communist China is Australia’s largest foreign investor.”
George Christensen is wrong. He’s a not a little bit wrong; he’s not wrong in emphasis; he’s not merely “misinformed”. He’s badly, inexcusably wrong. Even his own government has lately gone out of its way to trumpet that the United States is by far Australia’s largest foreign investor, not China. Announcing new national security restrictions on foreign investment aimed at China on 5 June, Treasurer Josh Frydenberg emphasised that even combined with investment from Hong Kong, which often as not is British, China is only the fifth largest foreign investor, way behind the USA and UK. Official Department of Foreign Affairs and Trade figures show that mainland Chinese investment is $78.2 billion, or 2 per cent of total foreign investment, while US investment is $983.7 billion, 25.6 per cent of the total, and UK investment is $686.1 billion, 17.8 per cent of the total. US investment has grown by well over $100 billion in the past four years, way more than total Chinese investment.
Not the full story: land is the only area in which Chinese investment ranks at the top, but only on paper—87 per cent of what is counted as total Chinese land ownership is a one-third Chinese stake in Gina Rinehart’s beef company. While China is still the second biggest landowner, pro-rata Chinese investors own just a third of what Britain holds. Graphic: Citizens Party
The one area in which China has ranked as a large investor, however, is in agricultural land. The obvious explanation for that is China values farmland for food production, seemingly more than Australia does given the way the government has allowed banks to abuse Australia’s family farmers. This Chinese interest in farmland though has provoked panic, resulting in the government putting national security restrictions on Chinese purchases. Now any Chinese land purchase over $15 million must first be approved by the Foreign Investment Review Board chaired by a former director of spy agencies ASIO and ASIS. The FIRB approval threshold for the USA, UK or most other countries that want to buy Australian farmland is $1.2 billion, 80 times that of China’s.
On paper, China is the second largest landowner in Australia, with 9.2 million hectares, just behind the UK with 10.2 million hectares. In a 30 June article on Pearls and Irritations, “The myth of Chinese money in Australia”, Australia-China Relations Institute (ACRI) director James Laurenceson provided important information from the ATO that revealed China’s actual financial control of Australian land is nowhere near the UK’s control. Laurenceson wrote:
“But drill down one level deeper and it’s revealed that 91 percent of the agricultural land held by Chinese interests is actually leasehold. In other words, the Chinese investor does not own the underlying land asset. For freehold land, China follows the Netherlands, the US and the UK.
“FIRB boss, David Irvine, also observes that leasehold land is, on average, less productive than freehold land. This means that if China’s share of Australian agricultural land was expressed in terms of value rather than area, it would be significantly less than 2.4 per cent. Analysis by Rabobank points to the value number likely being between 1-1.5 per cent.
“Further, the criteria used by the ATO to determine land as having Chinese interests is if the holder is a corporate entity with a Chinese equity share of 20 per cent or more. By far the largest landholdings with Chinese interests are those held by Australian Outback Beef Ltd, totalling 7.92 million hectares, or 87 per cent of the Chinese total. But, in fact, Outback Beef only features 33 per cent Chinese equity. A majority 67 percent share is held by Gina Rinehart’s Hancock Prospecting.”
In other words, 87 per cent of “Chinese” land in Australia is held by one company that the Chinese investors don’t control! If only 33 per cent of Outback Beef’s landholding were counted as Chinese land, China’s total Australian landholdings would be 3.82 million hectares, way below the UK.
Incidentally, this is also true for China’s ownership of 732 gigalitres or 1.9 per cent of Australia’s water market, which makes China the biggest foreign owner of water entitlements. But 500 gigalitres of those entitlements are from China’s ownership of just one asset, Cubbie Station, but the Chinese owner only has a half interest in Cubbie Station, which it shares with Macquarie Bank. Pro-rata China owns less water than the USA.
Australians need to question why so much effort has gone into making us believe China is doing something to us that isn’t even close to being true.
By Robert Barwick, Australian Alert Service, 1 July 2020
