Reserve Bank of Australia (RBA) deputy governor Ric Battellino says fears about Chinese investment are overblown.

He says that while China has figured prominently in the public consciousness regarding foreign investment, it accounts for but a tiny fraction of foreign capital invested in Australia.

“Australian Bureau of Statistics (ABS) data indicate that, at the end of 2008, Australian assets owned by Chinese entities stood at around $8 billion,” he said.

“This is less than half of one per cent of total foreign investment in Australia, and puts China a long way down the list in terms of importance as a source of investment,” Mr Battellino said in a statement.

Mr Battellino told the 3rd Annual Australian Parliamentary Conference in Perth that, from China’s perspective, Australia accounts for an even smaller share of its total offshore investment less than one quarter of one per cent.

In a speech entitled “Australia’s Foreign Trade and Investment Relationships”, he said that this share had not changed much in recent years, suggesting that China’s investment in Australia had grown in line with its accumulation of foreign assets globally.

He said it indicated that China did not have a particularly strong bias towards Australian investments.

Mr Battellino said one of the reasons why China may be getting a higher public profile in the area of foreign investment was that in the past couple of years it has accounted for a large share
of the proposals put to the Foreign Investment Review Board (FIRB).

“In 2007/08, for example, over 20 per cent of the number of investments approved by FIRB were from China,” he said.

“However, most of these entailed only small projects and, by value, the share
was less than 5 per cent.

“The figures for 2008/09, while not yet available, are likely to be higher due to the approval of Chinalco’s intended investment in Rio Tinto, though in the end that investment did not proceed.”

Mr Battellino said investment in Australia by Asian countries, whether measured in terms of the stock outstanding or the flow of new investment, remained small in comparison to the United States, and Britain, which together accounted for almost half of all foreign investment.

He said Japan was by far the largest Asian investor in Australia, with a share of 5 per cent and other Asian countries’ investments in Australia were noticeably smaller.

AAP