Bananas Joyce wants end to Chinese investment in Australia

[bellenuit]

As I said, the real market issue can be handled from an anti-competitive angle.

I doubt if it can. The basic difference between investment from a private Chinese company and a state owned Chinese company is that the former must run at a profit to survive. The state run company can look at the big picture and make decisions that are in the interests of China long term or China as a whole that may not be in the interest of the acquired Australian company. For example, what motivation would there be for a Chinese owned BHP to hold out for a 40% increase in iron ore prices (as it has done in the past) from Chinese state owned steel mills? What competition regulation has been broken if they just continue to use the previous year's price or some other arbitrary price that is a lot less than what would have been achieved at arm's length negotiations. If the government tries to intervene in such incestuous deals, as Joyce said, commercial disputes will quickly turn into diplomatic disputes.

I agree that Joyce shouldn't have said that there should be a total ban on all Chinese state investment in resource companies. He could have been a bit more diplomatic. Perhaps not mentioning China specifically and perhaps saying it should be decided on a case by case basis.

 

[Beej]

I agree that Joyce shouldn't have said that there should be a total ban on all Chinese state investment in resource companies. He could have been a bit more diplomatic. Perhaps not mentioning China specifically and perhaps saying it should be decided on a case by case basis.

Yes that's what he should have said, but the problem then is he would simply be arguing for things to stay exactly as they are, as that is the current process, ie all deals reviewed by the FIRB and approved by the Treasurer. Much too mainstream an idea for Banana's Joyce!!

Cheers,

Beej

 

[alphaman]

Here is what Mr Joyce said:

Sounds scary, but very vague in how that is actually going to materialise. Just how realistic is that scenario? China taking all the resources from the rest of the world, while everyone else stands by and suffers, just because China legally owns the mines?

Most diplomatic disputes are commercial anyway. Joyce makes it as if it's something we have never seen before.

By the way why is it that people automatically assume the Chinese government is capable of seeing the big picture and managing for the long term?

 

[prawn_86]

By the way why is it that people automatically assume the Chinese government is capable of seeing the big picture and managing for the long term?

Because they operate on 5 and 10 yr plans, due to the ruling party not having to change with elecetions etc. And you can bet they also have private 100 year plans. Its just the way they work. Take a look back in the 1500's etc when China was a major power.

 

[alphaman]

Because they operate on 5 and 10 yr plans, due to the ruling party not having to change with elecetions etc. And you can bet they also have private 100 year plans. Its just the way they work.

CCP's past governing performance is actually not impressive. Sure they are making economic progress now, but come on, a trader would not remove periods of poor returns when he is assessing his own performance.

Governments by design are inefficient and incompetent. Occasionally you could get temporary outliers, but they always revert back to mediocrity. So far China has not deviated from this rule.

Take a look back in the 1500's etc when China was a major power.

So, how did China bully the rest of the world when it was a major power? When you compare China to the western countries and Japan, they were actually pretty meek.

 

[bellenuit]

Why Joyce is right not to cede control of key industries to Chinese government owned enterprises (notice how they are also teaching Rio a lesson by arresting Hu) .....

Beijing's 'lesson' for Fortescue chief Andrew Forrest

http://www.theaustralian.com.au/bus...f-andrew-forrest/story-e6frg8zx-1225814240932

Susannah Moran From: The Australian December 29, 2009 12:00AM

A SENIOR Chinese government official wanted majority ownership of Fortescue Metals Goup's $1.85 billion Pilbara iron ore project, claiming it was Chinese "national policy" to "obtain control", and later vowed to "teach (Fortescue) a lesson".

That lesson, or "alternative way of co-operation", turned out to be providing information to a newspaper -- whose subsequent negative article about FMG's planned project sparked the corporate regulator's investigation and subsequent highly costly court case, which was last week comprehensively dismissed by Federal Court judge John Gilmour.

The machinations of the behind-the-scenes dealings are revealed in the 204-page judgment.

The Australian Securities and Investments Commission alleged Fortescue and its chief executive, Andrew Forrest, breached the Corporations Act and that Mr Forrest was deliberately dishonest and misled the market in relation to 2004 market releases that outlined "binding contracts" made with several Chinese companies about the planned Pilbara project.

The court heard that by early 2005, the Chinese were demanding an 80 per cent majority stake in the Pilbara project, a move Fortescue was resisting.

The judgment reveals detailed conversations that Xin Lou-Lin, later to become a Fortescue consultant, had with the deputy director-general of China's National Development Reform Commission (NDRC), He Lianzhong.

Mr Xin, who was a former schoolfriend of Mr He, gave damning evidence in the case, recalling a conversation in February, the month before the article in The Australian Financial Review appeared. "The Chinese companies wanted control of FMG and as FMG was resisting, we would teach them a lesson," Mr Xin recalled Mr He saying.

Justice Gilmour said in his judgment that Mr He caused information to be provided to an AFR reporter to the effect that the agreements with the Chinese contractors to build infrastructure were not binding. The report "caused considerable public commercial distress" to Fortescue, which the judge said "was Mr He's intention".

Weeks later, Mr He used "very offensive" language when talking about Mr Forrest, the court heard.

"He, at that time, when I talked to him, he used the Chinese words called the `zhou han', which is very unusual," Mr Xin said.

"He said Andrew `bu shi' -- Forrest `shao han zhou han'. That means, that's a semi-underground word. That means in my territory somebody try to challenge me. `Zhou han' means, you know, normally it's a Mafia or underground word.

"So I told Andrew, I said, `you're in trouble'. He is so angry at you people," Mr Xin recalled of the March 2005 conversation.

After the March article, Mr He met with Mr Xin in Beijing. Mr Xin told him the Chinese contractors had made agreements, but the NDRC "had later intervened to change the position".