25 Mar 2013

Digging Deep: Future trends for Chinese investment in the energy & resources sector

Our report "Digging Deep: Chinese investment in Australian energy and resources" predicts some future trends. Jonathan Li from our Energy & Resources group sets out its key findings.

Digging Deep: Future trends for Chinese investment in the energy & resources sector
Jonathan Li, Partner, Clayton Utz

For so long as the macro themes of urbanisation and a growth in GDP per capita in China continue I can see that China would need to continue to import its raw material needs and Australia is a major beneficiary of that given that we have four distinct advantages over other countries.

Firstly we are resource rich – the quality and the quantity of resources are tremendous. Secondly we have the knowhow, we have the people who know how to exploit the resources. We have certainty of law and then obviously the advantage of being a strategically located very close to China.

Certainly the intensity of China's interest in Australian resources will shift from time to time depending on the state of the global economy and also depending on the stage at which China's economy develops. As the per capita wealth of Chinese citizens increases we will see a shift in demand from bulk commodities to commodities required to make or manufacture higher value of goods, so sectors like precious metals, base metals and energy would be preferred over the bulk commodity sectors.

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