Charles Lui China’s rainmaker ‘fed up’ with Australia

Charles Liu, one of China’s “rainmakers” who played a significant role in putting together the $371 million S. Kidman & Co rural property bid ­vetoed by Treasurer Scott Morrison, says he is fed up with Australia, despite 20 years of doing business there.
He believes Australia is heading down the same populist ­­de-globalisation, protectionist route as other Western countries.
But he says he has many other fish to fry in the investment world.
He is the founder and chairman of HAO Capital, a private ­equity firm that manages almost $1 billion of assets in growth ­companies within China. He told The Australian that he had “given up on a couple of my Australian deals, including a LNG project, due to both political and commercial complications”, with the gas price having tumbled.
The question, he says, is whether Australia is willing to ship more gas, but at the lower prices now prevailing.
“The US is shipping liquefied natural gas now, and Canadian gas is cheaper than the Australian because its cost base is lower. Major Chinese power companies have already bought equity in Canadian assets.”
He said the political element that caused problems in getting deals ticked included the ramifications for the Chinese government of Australia’s pronounced military alliance with the US.
“I hope the Aussies will study a little history about the South China Sea issue,” he said. “China was the only country in the region that was a victor over Japan, that wasn’t a colony.
“The Republic of China took over all the South China Sea from the Japanese with the full concurrence and blessing of the other ­victor nations.” Why then, he asked, would Australia actively support the US in seeking to militarily “contain” China over this issue? Mr Liu, 66, originally came from Taiwan, graduated from Princeton and then the New York University School of Law, and then in 1975 relinquished his Taiwan citizenship and his US residency and became a Chinese citizen.
A former managing director for China of merchant bank Lazard Asia in the 1990s, he has been a senior adviser to a number of Fortune Global 100 companies.
“I am in a position where I don’t want hassle, including over politics. I have lots of fun getting involved where I feel welcomed, so I can just say ‘Drop it, forget it’.”
He said there were many entrepreneurs in China who wanted to do deals in Australia involving $80m or $100m, “but the big deals will be few and far between because they involve giant conglomerates or state-owned enterprises”.
Chinese business figures were still going to Australia to look at property deals, in large part, he said, because the Australian dollar remained “so cheap against the renminbi (as the yuan is also called”.
He said he warned a friend considering buying a hotel for $100m, that he “should expect the approval process there (Australia) to be somewhat lengthy”.
That is presuming, he said, that the funds are already offshore. If they are in China, there are further processes to be undertaken before investments can be made.
Mr Liu cited for example the vetoed S Kidman proposal.
The consortium bidding comprised 20 per cent ASX-listed Australian Rural Capital, 51 per cent the Shanghai Pengxin-controlled Hunan Dakang, and the other 29 per cent Gui Goujie’s Shanghai Cred Real Estate.
The veto appeared to hinge on security issues allegedly involving a weapons testing range 50km away from one of the Kidman properties.
“They should have made clear at the beginning — if that were the case — that a Chinese bid would not be acceptable,” he said. “If this is the attitude of the Australian government, one has to totally give up on the Kidman deal”.
He said the previous, Tony Abbott-led government, “was quite supportive, and then came the change of administration”.
“This is an unfortunate trend developing in Western countries today — with deglobalisation and xenophobia, populism and protectionism on the march.
“Domestic politics in the West, including in Australia, are increasingly heading in that direction despite — or maybe because of — the massive change under way in countries’ ethnic composition. “It’s unfortunate that entrepreneurial and hardworking Chinese people get caught up in this negativity, everyone being lumped together.”
Mr Liu said his concerns were shared by “many people in China”.
This is a problem for Australia and other Western countries, he said, because “there aren’t so many people with deep pockets any more except the Chinese”.
“But if people take a positive attitude, then an overwhelming amount of business can be done.”
Especially for Australia as it shifts from resource dependence, he said, “you have to integrate globally in other areas, and your best partner is China”.
“Yet all this talk of your military alliance with the US simply doesn’t make people comfortable.” Mr Liu said that at the personal level — for students, tourists or immigrants — this would have no impact. “But on the state-to-state level, relations could start to get rough and tough.”
He said the federal government should also have made it clear much earlier that foreign bids would not be acceptable for the 50.4 per cent of NSW utility Ausgrid for which Chinese SOE State Grid was ready to pay $10bn.
This underlined that “politicians in Australia, as in the US and European countries, are not people to be trusted”.
“They do not hold principles, they are focused on the short-term political game. This perception, spread in the Chinese press, makes it hard for SOEs to make strategic investments there.”
It shouldn’t come to this, he said, “because Australian and Chinese fundamentals match each other perfectly, one having a small market and huge resources the other a huge market and short of resources”.
The economic tragedy of the present age, he said, was that now the US and Europe “desperately need new infrastructure but lack the money to pay for it, yet when they had the money they lined the pockets of their bankers with it”.
In the 1980s Savings and Loans crisis in the US, he said, hundreds of people went to jail. “After the recent global financial crisis, no one. Instead, they all point fingers at China.”

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