A Study On Sino-Australian Cooperation In Energy And Mineral Resources

Energy and mineral resources are essential to almost all economic activities. Since the inception of its Reform and Opening-up program, China has remained in the period of soaring industrialisation and expediting urbanisation. The booming economy and the expanding population have caused domestic production of energy and mineral resources to fall short of their consumption. In the21st century, with the acceleration of economic growth, China has become the largest importer of resources globally and the imbalance between its resources supply and demand has been aggravated. Nearly20energy and mineral resources are in short and need to be imported in enormous amount to satisfy immense domestic demand. Such serious situation means that one of the most critical challenges China faces is to ensure the stable and sustainable supply of resources at reasonable prices.Australia boasts itself as "a country sitting on the mine car" thanks to its abundant and quality energy and mineral resources. The reserve volume and output of its resources rank high internationally. Its thin population renders the increase of domestic resources consumption limited. Consequently, Australia has long been one of the largest and most reliable resources exporters worldwide. Additionally, Australia also enjoys relatively stable political, economic and social environments, and a sound legal system.Both located in the Asian-Pacific region, China and Australia are geographically close to each other. In general, China and Australia have been maintaining friendly bilateral relations since they established formal diplomatic relations in December1972. All the aforementioned factors have strengthened the mutual need of the two nations and provided conditions for Sino-Australian resources cooperation. Since the establishment of their diplomatic relations, both the volume and the value of bilateral resources trade have been on the rise, with their bilateral cooperation in energy and mineral resources becoming increasingly broad and deep. The number of energy and mineral products traded between them has been expanding; the collaboration modes have been diversified from resources trade to investment and cooperation in energy technology.Generally speaking, Sino-Australian resources cooperation has been steady. Nevertheless, it could not be called plain sailing in view of the difficulties both countries have gone through and the challenges facing them. Mutual collaborations in resources trade and investment are affected by various elements both at home and abroad. For instance, the discrepancies in ideology, political systems, and economic conditions between the two countries have been posing great challenges to Chinese corporations’ investment in the Australian mining industry. Due to the above mentioned apparent differences, normal Chinese investment may sometimes be regarded by some Australians as a strategic behaviour which aims to gain control over Australian resources. Therefore, it is worth studying how to make Chinese investment understood by Australians, dispel their worries or aversions, and make them aware of the fact that Chinese investment in the Australian resources sector is a kind of economic activity which is conducive to both countries. In order to shed some light upon future collaboration, this research endeavours to explore the benefits and significance of Sino-Australian resources cooperation, and analyse the problems and difficulties in the course of their collaboration through the study of the progression of bilateral relations in energy and mineral resources.This dissertation employed both quantitative and qualitative research methods. Firstly, relevant data were processed and converted into line graphs, bar charts, and pie charts to reflect visually the changes of the volumes and the values of bilateral resources trade and investment. Secondly, case studies were adopted to research and analyse the advancement of typical collaborative projects and their problems, and explore countermeasures accordingly. Thirdly, related theories such as resource economics and international relations were applied in the study and analysis of the past, present, and future of Sino-Australian resources cooperation.The dissertation has six chapters in total. Chapter One is introduction, which includes the background of the project, literature review, research objective and significance, and research methodology.Chapter Two deals with the evolution of resources policies in both China and Australia, which is the policy backdrop of bilateral resources cooperation. It is further divided into two sections to expound on the development of their resources policies and strategies respectively.The third and the fourth chapters focus on Sino-Australian resources trade. Dedicated specially to Sino-Australian energy trade, the third chapter examines in detail the four energy commodities traded between China and Australia:coal, petroleum (including crude oil and Liquefied Petroleum Gas), Liquefied Natural Gas (hereinafter referred to as LNG), and uranium. Bilateral trade in those four energy products was unfolded from the following three aspects:bases for trade, trade practices, and determinant factors.The fourth chapter is devoted to minerals trade between the two countries. Mineral products covered in it are iron ore, copper ore, bauxite, alumina, and aluminium. Study was conducted from the same three aspects as the previous chapter.Chapter Five is on Chinese investment in Australian resources sector. It is divided into six sections. The first section gives a brief account of Foreign Direct Investment (FDI) in Australia and China’s Outward Foreign Direct Investment (OFDI). The second section analyses the background of Chinese investment in Australian mining industry from two respects:Australia’s environment for mining investment, and the internal and external causes of these Chinese investments. The next section introduces Australia’s review system of FDI. The fourth part elaborates the progression of Chinese investment in Australian resources sector. The fifth part probes the challenges of Chinese investment in Australia and the enlightenments they give us. The last part expounds on bilateral collaboration in energy technology in the investment projects:united research on new energy, cooperation in coal technologies, and collaboration in solar energy and wind energy.The last chapter is conclusion. It sets out to summarise the general features and significance of Sino-Australian resources cooperation, then analyses the challenges both countries are confronted with and advances corresponding suggestions. It claims that the bilateral resources collaboration is to have a rosy prospect.The main conclusions of this research are as follows: Via Sino-Australian cooperation in energy and mineral resources in the past decades, Australia has effectively relieved China’s thirst for resources, and thus has contributed significantly to China’s rapid economic growth for a long period of time. That contribution has been almost irreplaceable. On the other hand, China has helped Australia reap its mineral boom in the21st century, and has assisted Australia to maintain its economic growth rate at3-4%, which is much higher than that of most other developed countries. Sino-Australian resources collaboration has served as a huge impetus for the economic and social developments of both countries, and has made considerable contribution to the welfare of people in both countries. As a result, it has made China and Australia increasingly dependent upon each other. In addition, as an important component of the general relationship between the two nations, Sino-Australian relations in energy and mineral resources has become a powerful driving force of the advancement of China-Australia relations. Furthermore, it has played a crucial role in stabilising bilateral relationship when the relationship is in danger. Sino-Australian relations in energy and mineral resources and general China-Australia relations have formed a benign interaction. In conclusion, bilateral resources cooperation has great potentials as well as several uncertain factors and problems, which need to be paid constant attention to and tackled appropriately with an active and objective attitude.