Speaking at the HSBC Australia-China Conference last week, HSBC chief executive Stuart Gulliver said while it is understandable that fears surrounding China exist, the country is reforming “with a clear purpose”.
According to Mr Gulliver, China has aspirations to develop its economy around two major priorities – enhancing sustainability and reducing restrictions on investment into China.
“This openness to foreign investment – and the ideas and technology that it brought with it – was one of the main reasons for rapid economic development.”
Moreover, within this stage, China is starting to facilitate overseas direct investment (ODI).
“Beijing realises that greater outflows are necessary to bind China more tightly into the global financial system and to strengthen links with its economic partners.
“Liberalisation of finance rules, private sector guidance and targeted use of foreign exchange reserves for overseas investment are all geared to expand opportunities for Chinese firms wishing to invest abroad.”
Mr Gulliver said the “Belt and Road” initiative launched by Chinese President Xi Jinping will be a foremost driver of export demand in China. It will also create greater trade flows between China and its partners. The China Development Bank estimates the value of the initiative to come in at $900 billion.
“This makes ODI more than a tool of investment. It clearly makes it a tool of economic, financial and political strategy.
“China’s continuing thirst for infrastructure and the need for resources to fuel ‘Belt and Road’ will actually ensure that Australian materials and expertise do still remain heavily in demand,” he said.
In terms of sustainability, Mr Gulliver said the country understands that "development without direction is neither sufficient or sustainable". He said the Chinese State Council has "promised" to incorporate ecological conservation into both economic, social and political development.
Mr Gulliver said understanding China's priorities is necessary for Australia.
"For government, it obviously means engaging on behalf of business, using the machinery of the state to open new doors and maintaining meaningful dialogue to advertise Australian expertise and help China meet its goals."
Mr Gulliver added that participation in China's economic priorities may require "unprofitable" short steps that will "reap benefits many miles down the road".
"So instead of waiting for barriers to fall or restrictions to be removed, it is far more effective to plot a path to the outcome that you want to see, monitor the market and participate in any way that accelerates that process."
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