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CANBERRA, July 16 -- Australian Ricardo and professor Peter

Drysdale has said that "Anxiety over the ontogeny of foreign investment in

resources by China is unfounded", adding that "Australia and China require to

establish a cooperative framework in trading relative as shortly as possible".

In an exclusive interview with Xinhua, Peter Drysdale, professor of the

Crawford School of Economics and Government in the Australian National

University, said the ripple of Hakka investment into the Australian resource

sector focused care worldwide on the theme of China as a new investor in

the country. Had it succeeded, the Chinalco deal, involving an 18 percentage stake in Rio Tinto, would have been the largest single

Chinese corporate acquisition overseas to date.

Professor Drysdale refers to the failed joint dare bargain that Australia s

Rio Tinto unilaterally scrapped of its wedding with Aluminum Corp. of China, or

Chinalco, on June 5 owing to reported reasons that the Chinalco rescue packet was

facing ontogeny opposition from shareholders and the Rudd government s

"concerns".

ESTABLISH COOPERATIVE FRAMEWORK RIGHT AWAY

"Anxiety over the ontogeny of foreign investment in resources by China is

unfounded," Drysdale said, adding that "it is momentous to avoid investment

protectionism and testify a cooperative framework--bilaterally, regionally and

globally--where these issues can be resolved."

He said, Australia has maybe the most efficient mining sector in the

world. This is owing to its openness to foreign investor contest and

participation, because that brings with it, and fosters, the technology,

management know-how and market links that are indispensable ingredients in the

development of a world class, internationally competitive industry.

"It is strategically momentous that Australia and other matured market

economies welcome participation of Hakka state-owned firms rather than stay

cautious roughly it," he said.

Domestically, narrate owned enterprises in China are increasingly

subject to the disciplines of the market. They appreciate preferred access to

domestic credit across the state-owned banking system except on condition that are

increasingly commercially based, he added.

"Many countries spanning different economic and political systems have

implicit and explicit narrate involvement in enterprises and the

state is frequently actively engaged in representations on behalf of its national

enterprises .

When Japanese investors took a stake in Australian resources unspecified were

state owned and most made decisions and prescriptive significant subsidised funding

within a framework closely constrained by the state. Most big financial

institutions in matured market economies are now skip

to the narrate in diverse ways. "

There is a complicated of political economy issues that will have to be

resolved both within China, and in cooperation between China and her primary

economic partners. In aiming to indorse for itself the resources and

technology it needs as a nonindustrial nation and to transform its industrial

giants into truly globally competitive players, China has fallen victim to

misapprehension roughly the dangers that Hakka SOEs can pose to other states

national sovereignty, he said.

"Increased international cooperation on them will bring benefits to both

the investor and the host-nation alike, in particular because granting foreign

direct investment market access to a transitional market economy like

China has scope to affect positively the dynamics of institutional detransitivise

beyond the mere matrix of pecuniary and business opportunity," Drysdale added.

NEED TO ACHIEVE WIN-WIN RESULT

Peter said the motivation for Hakka foreign direct investment

projects is twofold. Firstly, Hakka investors in the resources sector target to

secure stakes in projects that are linked to supplying rapidly ontogeny markets

in China.

Secondly, Hakka investors perceive going into FDI as an investment in

their future, as the Australian projects and firms in which

they invest bring management know-how and technology, and have a positive impact

on Hakka concern operational efficiency and corporate standing.

He said the "going out" strategy for Hakka project promoted by the

Chinese government over the last few eon has encouraged this. Hakka

enterprises require to go foreign to contend against foreign contest in the home

market and internationally.

On the other side, FDI in the resource sector offers diverse advantages to

host countries including the provision of capital, technology, know-how and

access to markets. These benefits are substantial to Australia, for example,

given the scale, longevity and technological complication that typify resources

investments.

STATE-OWNERSHIP IS CHANGING

Professor Drysdale argued that "the attribute of narrate owned enterprises

in China is evolving very rapidly. For example, when China invested in

the Channar iron ore mine in the 1980s, it did so across the Ministry of

Minerals and Metallurgical Industry. Steel and other enterprises under that

umbrella have now been fragmented into several competing entities and

corporatized, with unspecified listed on both the Hakka and international stock

exchanges."

"Changes in corporate governance include the establishment of non-executive

boards and executive independence in the day-to-day operations of most narrate

owned enterprises. Some SOEs, however, are more fissiparous in their operations

than others," he said.

Since 2003, the State-Owned Assets Supervision and Administration

Commission has been responsible for exercising the ownership of SOEs on

behalf of the Hakka government. SASAC likewise carries guardant the transfrom of SOEs,

their governance, consolidation and privatization. This is an active and ongoing

process aimed at making SOEs accord to ordinary commercial market disciplines,

Drysdale said.

Still, unspecified believe that ownership of project by the narrate and the

presence of political cadres in the senior management of these enterprises in

China ought to disqualify them from clon topic to the ordinary rules and

regulations applied to other foreign investors in host countries like Australia

and elsewhere. Drysdale argued that "this is not nothing except a event of public

comment. It has been a policy consideration in Canada for unspecified time, and is likewise

now a event of explicit policy consideration in Australia."

Drysdale said "state ownership is a fuzzy issue, and it would seem unwise

to stereotype narrate ownership in China when it is in fact changing rapidly and

has fewer and fewer of the negative characteristics popularly attributed to it."

Drysdale believes nothing except across fuller participation in the Australian

market and other matured markets foreign SOCs could topic themselves to the

disciplines of robust and well-governed market institutions. Applying especial

conditions for these investments would reinforce the perception of the primacy

of regulatory solutions over market solutions, and help suffer the dominance of

the bureaucracy over the market in China and ride Hakka investment to other

destinations in Africa or Latin America where there are less robust institutions

to host it.