Playing the China card may win votes, but it’s bad for Australia

A still from a NSW election ad, run on television and online, which says "selling the electricity network is wrong; selling it to another country is just not on". CFMEU Mining/YouTube

In the final days of the New South Wales election campaign, Labor and the unions have decided to play the China card. Kudos to Fairfax journalist Joe Aston: he predicted this more than a month ago, noting that with two potential Chinese bidders for NSW power assets, there were "two juicy avenues for a foreign investment scare campaign".

The issue of whether foreign investors – and particularly state-owned Chinese interests – should be allowed to bid for privatised power assets has been bubbling along throughout this election campaign.

But things have become more heated in these last few days. Unfortunately, it has happened against a recent backdrop of state and federal politicians from both major parties pandering to populist prejudices against Chinese investors, on everything from high-end real estate to "buying up" our farms.

Doing that ignores the facts, including that according to our very own Australian Bureau of Statistics, Australia has invested nearly as much in China as China has invested in Australia. (You can download the ABS tables here: Table 2 shows the level of Chinese investment in Australia, which was A$31.9 billion at the end of 2013, while Table 5 shows Australian investment in China had reached A$29.6 billion in the same period.)

And for all the headlines that it attracts, the Chinese share of the total stock of foreign investment in Australia was a minuscule 1.3% at the end of 2013, far behind other countries including the United States, United Kingdom, Japan and Singapore.

The five top countries investing in Australia, and their percentage share of the total level of foreign investment here, for the year ended 31 December 2013. Australian Bureau of Statistics 5352.0 - International Investment Position, Australia: Supplementary Statistics, 2013, CC BY Click to enlarge

"Don't go China's way"

On Thursday, the second last full day of the NSW campaign, Premier Mike Baird was urged by voters across Sydney – first a market vegetable seller, then a woman at the Royal Easter Show – not "to go China's way".

Those voters were responding to Baird's plan to privatise state-owned power networks, which may attract interest from foreign bidders, including – but not only – from mainland China and Hong Kong.

In response, Labor and a union representing mining and energy workers have been ramping up their warnings against the risks of foreign ownership, such as this ad from NSW Labor, featuring a front page story about Hong Kong billionaire Li Ka-shing.