A brief history of Chinese agricultural investment in Australia

Australian Policy Settings

The former government produced three key policy documents, outlining a vision for agribusiness engagement in the region.

The Asian Century White Paper outlined the regional challenges and opportunities for Australia in the 21^st century, with specific reference to agriculture.  It outlined Australia’s comparative advantage in agriculture – a reputation for safety and quality, strong R&D, and political and economic stability.

Feeding the Future ook this further, looking at potential for joint co-operation with China in investments and R&D.  It discussed encouraging investment by streamlining our regulatory environment, and facilitating high-level contacts for business and politics.

Finally, the National Food Plan looked at the Australian food chain ‘from paddock to plate’, in light of the growing demand for quality food in emerging markets.  It discussed the comparative advantage of Australia and other competitors and proposed a range of programs underpinning market development and competitiveness in the region. 

The incoming government has shelved the Asian Century White Paper and National Food Plan (to be replaced by a paper focusing solely on the agricultural sector), instead emphasising speedy conclusion of FTA negotiations.

However, Chinese demands for greater investment have not changed, nor has Australian antipathy towards that idea.  If significant concessions are required for the FTA’s conclusion, it will require delicate finessing.

The current government has sought to manage this in various ways:

Firstly, by softening their position (previously strongly against SOE investment).  Significantly, the government no longer holds that such investment in Australia would ‘rarely be in Australia’s national interest’.

Secondly, building on the Gillard government’s ‘Feeding the Future’ report, it announced an ‘Investment Co-operation Agreement’, to identify projects for joint investment, emphasising agricultural projects in northern Australia.

Politically, it appears designed to demonstrate the potential of Chinese-invested projects to a sceptical public, warming them to the idea of significant concessions on investment in an eventual FTA.  It may help re-position the debate, with reminder that foreign investment in Australia is to our own benefit.

Above all, we need to realise that FTA conclusion is not simply a matter of Australia ‘negotiating harder’ to force investment off the table.  China is driven by its own internal economic situation, and no amount of Australian haggling will persuade it to substantially alter its investment policy.

Consumer demand for food is expected to double in our region, and China’s growing middle class will increasingly demand quality products, which Australia is uniquely positioned to provide.

But to grasp this opportunity, Australia needs an open debate that recognises the history and trajectory of China’s opening, its current policies, and its impact on the development of its agricultural sector.