Say no to Chinalco
IF Kevin Rudd and his Treasurer, Wayne Swan, do not rule against the Chinalco bid for a big stake in the mining company Rio Tinto, and a number of its key Australian assets, they will have been overborne by Chinese intimidation. This is shaping up as a profoundly important inflexion point for Australia, geo-strategically more than economically.
There is no trace of xenophobia in this concern. Chinalco is owned by the Chinese Government and it is an agent of the Chinese Government. As such, it needs to be considered in a completely different light from potential investments by private companies, or even by companies owned or influenced by much smaller governments or by governments with fundamentally different political systems. Chinalco first got interested in Rio to block the bid by BHP Billiton. It acquired its stake in Rio in an aggressive fashion and for strategic purposes, to stop BHP.
For much of the past 12 months the Rudd Government has been telling the Chinese to keep their stake in Rio small. They have given this message quietly, respectfully, mostly in private, with the greatest consideration for Chinese face. They have also allowed the message out in semi-public ways.
This was the clear burden of Swan's speech last July to the Australia-China Business Council.
Swan outlined six considerations for screening investments associated with foreign governments.
These were: whether the investor is independent from its government, whether it generally obeys the law, whether it may hinder competition or lead to undue concentration, whether it may affect Australian Government revenue, whether it affects national security and whether it may affect the operations and directions of an Australian business and its contribution toAustralia.
Swan in effect added another consideration when he said: "Australian governments are particularly attentive when the proposed investor in an Australian resource is also the buyer of that resource ... as the proposed participation by a consumer of the resource increases to the point of control over pricing and production, and especially where the resource in question is already developed and forms a major part of the total resource, or where the market disciplines applying to public companies are absent, I will look more carefully at whether the proposal is in Australia's national interest."
On the plain meaning of the English language, Swan's words, the words of the Australian Government, have no worth if Chinalco is approved.
However, the politics are even more instructive. Swan's words could not have been more explicit. They were approved by Rudd or people very close to him. Their message to the Chinese was simple. You can invest in Australian resources but don't overdo it.
Some analysts believe the Chinese misinterpreted what the Rudd Government was saying to them. But this makes no sense and greatly underestimates the business and political savvy of the Chinese.
Instead, they seem to have decided to test Rudd out, to see whether he has the backbone to say no to them on a matter of substance. Rudd's predecessor, John Howard, pursued a very productive, respectful and good relationship with Beijing but he was, on several notable occasions, willing to say no to them.
Rudd should do the same. Rudd showed great political courage in raising human rights during his first trip to Beijing. He deserved every bit of praise he got over that issue. But this is the first occasion on which he needs to say no to the Chinese about something they really want.
The Chinalco bid is a diabolical policy problem. Andrew Shearer and Mark Thirwell, in a useful policy paper on foreign investment rules for the Lowy Institute, last year encapsulated the problem neatly. Western governments, Shearer and Thirwell said, "have told their voters that the private sector, not government, should take the lead in managing most businesses. At the same time, they have stressed the importance of openness to foreign investment. When confronted by government-controlled foreign investment, one of these propositions has to give. The question is, which one?"
Most of the arguments against the Chinalco bid have so far been commercial economic arguments. The deal threatens to diminish significantly the natural advantage Australia enjoys as a nation because of its possession of the minerals. These advantages cannot be competed away. They are called the resource rent, and naturally China Inc would want the resource rent to accrue to China, not to Australia.
As one very senior Australian puts it: "If China is going to play on the mercantilist chess board, we can't play only on the other chess board."
BHP is a case in point. As a vitally interested party, BHP believes that it will be strategically damaged by the Chinalco-Rio deal. Many of its assets sit next to Rio's assets and have similar price structures. Not to put too fine a point on it, cost and pricing information in due course would pass through Chinalco to the Chinese Government to the detriment of BHP's negotiating position.
But it is entirely right that there be a political debate about this too. As Shearer and Thirwell comment: "A further important complication is geo-political. Traditionally Australia's most important trading partners have also been our key security partner (Britain and then the US), or at least an ally of our key security partner (Japan), all of them democracies.
"Now for the first time our largest trading partner is authoritarian, a quasi-mercantilist and a strategic competitor of our major ally."
The Chinese run a very sophisticated and integrated government. As with any huge system, not everything runs like clockwork, but it is nonsense to think the different arms of policy are not ruled by the central government. In one famous example, China's State Administration of Foreign Exchange bought Costa Rican government bonds in exchange for Costa Rica cutting diplomatic ties withTaiwan and establishing them with Beijing.
If China does not want people to be suspicious about its state-owned enterprises, or if it does not seek geo-strategic advantage from them, the answer would be very simple. It could privatise them.
One very bad outcome would be for Rudd to approve the Chinalco deal but attach various conditions. This would be bad for three reasons: the conditions would be ineffective, the precedent would be set that Beijing negotiates commercial details with the Government, not with Australian companies, and the lesson of Rudd giving in to the Chinese would be obvious. There is a much better alternative: just say no.
狗仔卡
发表于 2009-3-3 21:37
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千斤顶
显身卡
发表于 2009-3-3 21:54
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