Chinalco – Rio Tinto Deal : A Case Study of Foreign Direct Investment from China to Australia

This essay aims to examine the flow of foreign direct investment (FDI) from China to Australia by analysing the proposed acquisition of Australian-based mining company Rio Tinto by the Chinese state-owned aluminium producer Chinalco. The proposed deal is illustrative of China's interest in engaging in outward FDI, as well as the benefit to Australia in welcoming inward FDI, and highlights key features of Chinese and Australian FDI policies. The paper is organised in four sections. The first section outlines the key features of Chinalco's proposed acquisition of Rio Tinto. The second section examines FDI flow from China to Australia, looking particularly at the FDI policies of the two countries in the context of the Chinalco – Rio Tinto deal. The third section applies the theoretical policy approaches to the facts of the Chinalco – Rio Tinto deal, discussing the potential benefits and risks of the proposal. The fourth and final section provides a summary and discussion