Come Wayne Swan; Come Joe Hockey, ignore the China phobia in the community and embrace China as we never have before.
This is the dramatic message from top Australian chief executives to our politicians as conveyed via the Business Spectator CEO Pulse Survey.
Australia was developed by British, American and Japanese capital. Now our CEOs want to turn to China.
Just under two thirds of Australian CEOs want the Chinese to invest in Australia in general but particularly in manufacturing and infrastructure. There is a little less enthusiasm about mining where only 57 per cent of CEOs want to encourage more Chinese capital investment in the sector.
In other words the Australian CEOs want the Chinese to invest in our roads, sea/air ports and energy utilities and integrate our manufacturing with China.
The simple truth is that our manufacturing desperately needs investment. If our institutions will not invest and our managers are too limited in their ambitions then we need the Chinese.
We also need infrastructure, but again our institutions are so short term oriented that they cannot find the money, although neither our state nor federal governments know how to tap superannuation and are often nervous about using tolls to fund infrastructure projects. Yet governments no longer have the necessary tax revenues so a new approach is required. Again we will need to turn to the Chinese but there will need to be a lot more toll style assets.
On the other hand our CEOs are more nervous about the Chinese investing in agriculture with less than half of CEOs saying we should encourage more investment in Australian agriculture production assets (41 per cent) and the rest of the agricultural industry (42 per cent).
Many farmers desperately want the Chinese to step in and provide markets so that they lessen their dependence on Woolworths and Coles and increase margins. In turn this will escalate food prices for Australian consumers. The Pulse survey does not cover these issues but it’s a pointer to what may be ahead.
Here are some key CEO views about Chinese investment:
-- "Australia is a capital-scarce economy that needs increasing foreign investment to expand. What is important is the regulatory arrangements around that investment, not the country of origin of that investment. The current media and conservative political concern on Chinese investment seems more contrived than real”.
-- "Stronger commercial links with the major growth economy of the next 50 years. Why on earth wouldn't you? It may also galvanise some of the fat and complacent domestic funds institutions to take a longer term view in the their investment horizons.
-- "Food production is going to be a major issue in years to come as the worlds’ population continues to grow. I have no problems with Chinese investment in our industries but have concerns over ownership of large tracts of land over our food producing areas.”
-- "I feel that manufacturing needs some foreign capital to kick it along albeit, Australia is now one of the worlds’ most uncompetitive countries to manufacture in. I don't agree with the huge buy up of agricultural land we are seeing by China. Australia needs to own its agriculture!”
-- "We are selling our sovereignty and will never have a chance to buy it back ... particularly in the area of agriculture. If we sell our food security we are selling the keys to our survival.”
And Australian CEOs are not past giving advice to the current Chinese Premier Hu Jintao and his likely successor Vice President Xi Jinping, urging them to support working together with Australia to build an open and honest long term relationship -- "The partnership makes sense. We need people and consumers, they need raw materials. It's a great match”.
The CEOs urge the Chinese leaders not to be deterred by "the current negativity of Chinese investment in Australia”.
"Ignore the populist comments from certain sections of our political representatives and instead focus on... maintaining an open, honest and transparent dialogue in relation to foreign investment proposals”, one CEO said.
Our chief executives are ahead of our politicians.
Research design and analysis for the CEO Pulse survey was conducted by GA Research and fieldwork by AFS. The sample comprised 105 CEOs of organisations with an Australian turnover of $100 million or more who opted to participate in a five minute survey conducted over the phone or online between Tuesday 9 October 2012 and Friday 19 October 2012.