While the country needs to grow at around 8 per cent a year to stave off a spike in unemployment, which it now appears will not be achieved, it is still likely to be the fastest growing economy by a wide margin. The other emerging markets too, battered even harder than the western stock markets, are still expecting positive growth rates, which makes their stock markets look much more attractive than those in the west. China’s importance is much more than as a purchaser of Westernproduced resources; it is increasingly important for global financial markets.

According to Anthony Fasso, the Asia Pacific chief executive for AXA Rosenberg and AXA Investment Managers: “The investment centre of the world is no longer London or New York, and it is certainly not Australia. It now resides in North Asia and, principally, in Beijing.” China’s State Administration of Foreign Exchange has US$1.8 trillion, including about $500 billion in Freddie Mac and Fannie Mae, plus US treasuries, while the sovereign wealth fund China Investment Corporation has $170 billion (down from $200 billion when launched last year) and the pension fund National Council of Social Security Fund has about $70 billion.

Fasso says AXA works with most of the government funds in Asia and can say, categorically, that they detest the phrase ‘sovereign wealth fund’ because they tend to be very different. “It is generally quite difficult to draw direct comparisons between them,” he says. “The same holds true for the Chinese agencies, whose mission and objectives tend to be quite diverse.” There are also the state-owned or controlled entities which include Sinopec, Chinalco, Bank of China and China Life.

These are the companies most interested in making strategic investments internationally, especially in industries such as energy and resources. But financial services are not generally seen as strategic. Fasso says: “Chinese investors tend to view financial services firms as a means of obtaining access to technology transfer and training. Some acquisitions or strategic stakes in financial services firms have been more in the nature of a ‘trophy’ prize than representing a strategic interest.”

Unfortunately, Fasso does not believe that Australia is going to get more than its fair share of Chinese investment, particularly in the financial services arena. “As for recent announcements by the Australian and Chinese authorities on allowing Chinese investors to invest in Australian securities or funds, I have a stark message: do not expect much. Australia is only a small component of the MSCI and there are more wellestablished mechanisms to invest in global and regional securities than via an Australia-domiciled fund.”

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