Chinese Sovereign Fund Hopes to See Easing of Australian Investment Rules

An executive from the sovereign wealth fund of China, China Investment Corp. stated that Julia Gillard, the Australian Prime Minister is expected to reduce restrictions on foreign investment policies. Jin Liqun is currently the head of the supervisory board and he aired his statement while talking about the company’s future policies. Incidentally, a group of Australian and Chinese executives met with the Australian officials and raised this particular issue. In past discussions, Liqun, himself had addressed this issue as well. These restrictions have an effect to the fund flows and investments of China Investment Corp. into Australia. Liqun is currently attending the Boao Forum for Asia and when he was asked on this matter, he aired his comments.

According to Liqun, while talking to the executives in an earlier meeting, Australian officials stated that they welcome any sort of investment with open arms as this Asia-Pacific country is currently hungry for capital. It is expected that during her trip in China, Gillard will seek a deal thereby allowing direct conversion of Australian Dollars into Yuan. If this happens, the cost of trade and investment transactions will get reduced. A report on this matter was published in an Australian newspaper on 30th March. Gillard will be meeting Xi Jinping, the current President of China at the Boao Forum. She is scheduled to meet the Premier Li Keqiang in Beijing as well. Incidentally, China is the biggest trading partner of Australia.

Jin added that not only China Investment Corp., but many other Chinese companies are also interested in putting their money in Australia. Similarly, there are plenty of Australian businessmen who are looking to invest their money in China as well.

Currently, Australian Government classifies all the state owned Chinese companies as being extensions of the Chinese Government.

Therefore, the total number of shares these companies can own in an Australian company is capped as well. Jin added that all of these state owned Chinese companies have independent operations and hence, all these cannot be calculated together. Jin is hopeful of a better environment for investment, but, he doesn’t believe that the issue will be resolved pretty quick.

Jin believes the high level meetings that Gillard will be having with Li and Xi may promote cooperation between the countries and continued negotiation can cause gradual reduction of barriers to capital.