The opening up of China’s financial markets will drive even more Chinese investment in Australia, with capital flow to sectors all across the range from agriculture to financial services, ANZ managing director of corporate and commercial banking Mark Whelan said.
Australia already got 7.4 per cent of China’s outbound investment in the first half of 2014, according to a PricewaterhouseCoopers report. Chinese investment in Australian property has been such a topical issue that the Australian parliament initiated an inquiry into the impact of foreign investment in the sector, predominantly Chinese money.
But that’s probably only the start, according to Mr Whelan, who spoke at an ANZ 'Opportunity Asia Insights Series' event in Sydney.
“We expect by 2030 there will be $200 billion worth of investment (from China) in this country. It won’t be just into property, into mining, which is where traditionally it has been. We believe it will go into agriculture, engineering and value added services, financial services and it will go across the whole range,” he said.
“We should not be scared of that, we need capital,” he added.
Data from Department of Foreign Affairs and Trade shows China has invested about $31.9bn in Australia in 2013.
Most of the investment from China is still in US government bonds, as China’s capital is centrally controlled, but that will change as the country is gradually removing capital barriers and facilitating freer flow of capital, Mr Whelan said.
That will see more Chinese capital going to the hands of businesses and entrepreneurs, who will in turn seek investment opportunities in Australia and other countries, he added.
“Progressively that (Chinese financial) market will open up completely. We think the renminbi will become the currency of trade certainly in the Asia-Pacific region, and as capital restraints stop or open up, you will only find much freer capital flow either way,” he said.
“That will change over the next decade or so, probably quicker than what we expect.”
(Reporting by maggie.lu@businessspectator.com.au)