'No blanket ban' on Chinese investments in Australia as bilateral tensions ease
Australia's recent approval of a Chinese investor's US$270 million investment in an Australian nickel company shows the country remains open to Chinese investments as tensions between the two nations ease, according to experts.
On Monday, the Australian Foreign Investment Review Board (FIRB) approved Chinese investor Shanghai Decent Investment Group's US$270 million investment in Australian-listed nickel product producer Nickel Industries.
The raised funds will go towards Nickel's acquisition of an Indonesian nickel project.
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Shanghai Decent is a subsidiary of the world's largest stainless steel producer, Tsingshan, based in China's Zhejiang province.
The investment will make Shanghai Decent the company's biggest shareholder with an interest of just over 28 per cent.
While the investment was neither unique nor related to sensitive assets, James Laurenceson, director of the Australia-China Relations Institute, said it "made the point that there was no blanket ban on Chinese investments" in Australia.
There were concerns in China-Australia investment circles that previous blocks on Chinese deals during what was the lowest point in bilateral relations between 2018 and 2022 and sweeping changes to Australian investment legislation politically targeted Chinese investors.
David Olsson, president of the Australia China Business Council (ACBC), echoed Laurenceson's sentiment.
"It highlights the fact that Australia's door to foreign investment remains open and that FIRB assessments [of all foreign investments] are assessed on their merits," he said.
In turn, Chinese businesses showed a willingness to invest in investments that mattered to Australia, Olsson said during a recent trip to China organised by ACBC.
Olsson led a delegation of 15 local government officials and business executives, including those from Rio Tinto, Fortescue, Cochlear and HSBC, on a six-day visit to China in April just as ministerial visits between the two countries resumed.
"In recent senior business round-table [discussions] held by ACBC in China, we see an increasing awareness on the China side that their future involvement in our economy should consider partnership with Australian counterparts as well as providing some form of downstream value add to Australia's economy," Olsson said.
The Albanese government, since coming into office last May, has made efforts to invest in manufacturing in Australia and has called for Australian businesses to carry out downstream and midstream manufacturing locally rather than shipping off raw materials overseas.
The FIRB approval of Shanghai Decent's investment comes after Treasurer Jim Chalmers, on advice from FIRB, blocked China's Yuxiao Fund from increasing its stake in one of Australia's key rare earths producers, Northern Minerals, in March.
Chalmers did not reveal the reasons for the block but rare earths are listed as critical whereas nickel is not, according to Australia's critical minerals list that was updated in June.
Chinese miner Tianqi Lithium's proposed takeover of West Australian lithium miner Essential Metals in April would have been another test of whether Canberra was taking strides towards protecting its critical minerals assets and supply chains from foreign investors.
However, shareholders of the company did not approve the scheme. Lithium is a listed critical mineral for Australia.
Other previous high-profile blocks include Huawei's involvement in Australia's 5G network, the proposed A$370 million sale of Australia's biggest single shareholding, the S. Kidman & Co cattle empire to China's Dakang, and the A$300 million takeover of building contractor Probuild by the China State Construction Engineering Corporation.
In 2020, the Morrison government, which had angered Beijing over its stance to pursue an independent inquiry into the coronavirus at the height of the pandemic, tightened its scrutiny of foreign investments and made sweeping changes to the Australia Foreign Acquisitions and Takeovers Act.
While Canberra said it was aimed at "safeguarding" Australia's pandemic-hit companies from being raided, it prompted Beijing to call out Canberra to be "fair and non-discriminatory" to all foreign investors.
Chinese investments fell by 70 per cent the following year, although recent research showed they were slowly returning to Australia.
This article originally appeared on the South China Morning Post (SCMP).
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