Resource nationalism or resource liberalism? Explaining the Australian approach to Chinese investment in its minerals sector

Since 2005, a burgeoning wave of Chinese investments has set off a new ‘minerals boom’ in the Australian iron ore and coal mining sectors. While normally a welcome development for a host country, the state-owned character of the investing Chinese firms, and the ‘strategic’ rather than ‘commercial’ nature of their investments, has led to debate in Australia regarding how this process should be managed. Concurrently, in early 2008 the Australian governmentindicated an intention to more closely screen investments in its mineral sector “in the national interest”, with a number of Chinese proposals subsequently either rejected or made conditional upon specific commitments. Both supporters and detractors alike have claimed this approach suggests an emerging ‘resource nationalism’ – an attempt to subject market-based economic processes to political control for national developmental purposes – in Australian policy towards its minerals trade and investments with China.This paper challenges this understanding, through an examination of the political economy characteristics of Chinese foreign mining investments, the dilemmas these present to the Australian government, and the relatively restrained nature of its response as seen in its recent FDI screening decisions. Through this evidence, Australian policy responses will be explained as a defensive move against the potential for non-market behaviour resulting from the state-directed character of the Chinese investors, rather than any national program to politically control minerals trade and investment. On the basis of this discussion, this paper will argue that Australian policy instead evidences a 'resource liberalism' approach, that attempts to ensure that the governance of its minerals trade and investment with China remain firmly as market-based processes.