Australia 'let Sino relations go sour'
The Age
Friday September 4, 2009
AUSTRALIA bungled economic relations with China by failing to show the country the same level of attention Japan received in the 1960s, Western Australian Premier Colin Barnett said yesterday in Sydney.Amid simmering diplomatic tensions, Mr Barnett said governments had let Sino relations go sour by allowing China's state-owned companies to make speculative mining deals and hostile takeovers.Instead, he said China should have been courted as a long-term partner and invited to take modest stakes in some of the country's top assets."What I've observed . . . is Chinese state-owned enterprises getting involved in speculative ventures, small mining operations, hostile takeover bids on the stock market. That should never have happened," Mr Barnett said."We've failed to give the attention at a federal and a state level that was given to Japan in the 1960s, and I think that's an important lesson," said the Premier of the country's biggest mining state.China's growing presence in the mining sector has raised fears over its level of influence, culminating in a failed attempt by Chinese Government-owned Chinalco to invest $US19.5 billion ($A23.5 billion) in the mining giant Rio Tinto.However, Japan already has a firm foothold in many of the nation's prized assets after economic relations resumed shortly after World War II.For example, Japanese firms own 15 per cent of BHP Billiton's multibillion-dollar iron ore mines in the Pilbara in Western Australia. Despite being known as the "Big Australian", BHP has also sold stakes of up to 50 per cent in some of its coal mines in Queensland to Mitsubishi and Mitsui."I think what China wanted to hear was, 'Yes, your investment is welcome, yes, we want you in the good projects, not just the second-rate dodgy ones . . . we respect you as not just a market for raw materials, we respect you as a partner,' " Mr Barnett said.In contrast to the harmonious relationship with Japan, Sino relations have also been rocked by the arrest of Rio executive Stern Hu and other staff on espionage charges.Mr Barnett, who was visiting top Chinese officials shortly after Mr Hu's arrest, described intense hostility in the upper rungs of the Communist Party."Words like treachery and betrayal were put to me as opening comments; this was deep-seated," he said."They saw themselves as being treated harshly and not being made to feel welcome."The Chinalco deal collapsed before the Foreign Investment Review Board was forced to approve the plan, but commentators had criticised it for selling prime assets to the emerging economic power.This year China overtook Japan as Australia's top trading partner, driven by its appetite for iron ore. Resource-rich Western Australia accounts for 38 per cent of Australia's exports, and Mr Barnett said he expected the state's share of exports to climb above half in a decade."We cannot treat China as just business as usual, it is a special case because of its scale and importance to Australia," he said.
© 2009 The Age
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