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Strategic Insights 56 - Trade, investment and Australia's national security...or how I learned to stop worrying and love Chinese money

By Mark Thomson

Times are relatively good for Australia. While the rest of the developed world grapples with crippling debts and the most pervasive economic malaise since the Great Depression, Australia enjoys the warm glow of low public debt, 5% unemployment and the prospect of 'trend' economic growth.

While many factors have helped shelter Australia from the economic tempest, our integration into the international economy has been critical—in term of both trade and foreign investment. Critically, our economy continues to be buoyed by the burgeoning global demand for resources, in particular from China.

Yet misgivings emerge from time to time about our dependence on both exports and foreign investment. In the case of exports, it’s been suggested that our growing trade with China is somehow incompatible with our military alliance with the United States. In the case of foreign investment, there are many concerns; from questions about food security to the risk of espionage by foreign firms.

But while it is impossible to completely divorce our economic and strategic engagements with the world, Australia is in a robust enough position to independently pursue its interests in each area. We do not have to choose between economic engagement with China and our strategic alliance with the United States. Moreover, current regulation of inwards foreign investment provides strong protection of our national interests.