The Straits Times
By Jonathan Pearlman
SYDNEY: After a much-heralded decision by the United States to station Marines in northern Australia, Washington has quietly moved to expand ties on the economic front Down Under.
Attracted by Australia's mining boom and relatively strong economy, the US government's Export-Import Bank is poised to finance more loans in Australia this year than in any other country — about US$5 billion (S$6.1 billion) up from US$500 million last year and just US$500,000 in 2008.
The bank aims to promote US exports by backing international investors via loans, guarantees and insurance.
The chairman of the bank, Mr Fred Hochberg, appointed to the position by President Barack Obama in 2009, made his first visit to Australia last month to promote US exports for use in Australia's giant mining projects.
Less than a year after Mr Obama visited Canberra and Darwin to announce the stationing of up to 2,500 Marines there, Mr Hochberg visited major mining projects in Queensland and Western Australia.
The visit, which was seen as a vote of confidence in Australia's economy, included discussions about possible financing for a A$10 billion (S$12.8 billion) iron ore project overseen by the world's wealthiest woman, mining magnate Gina Rinehart.
Mr Hochberg told The Straits Times that Australia's growing economy and strong marketplace were of increasing importance to the US.
He said the bank's loans to Australian projects have typically been to support aircraft purchases, but it was now looking at a range of sectors. These include resource ventures, the sales of mining equipment, engineering services and Australia's first commercial satellite.
"China is getting a lot of attention right now, but the US outpaces China's investment by about 10 to one," he said in a phone interview. "China's investments overseas are usually about securing resources to buy.
"That is not how US companies necessarily look at foreign direct investment — they look at it as a way of tapping into local markets."
Though the US is only Australia's third biggest trade partner — behind China and Japan, with Singapore fourth — it is by far the biggest source of foreign investment. The overall American investment in Australia is about A$556 billion, compared with A$20 billion from China.
The dean of the University of Sydney's business school, Professor Geoffrey Garrett, said the US bank's focus on Australia was "symbolic" and sent a strong message to rival nations.
"[It] reminds the world — and most importantly China — that China might have a lot of trading partners, but the US has got a lot of friends with whom it can work very closely," he told The Australian.
Though Australia is the biggest source of Chinese foreign direct investment, the amount pales in comparison with investment by US companies.
Last year, the US contributed 24 per cent of Australia's foreign investment, while the United Kingdom was second at 14 per cent, and China — the ninth biggest — at only 2.6 per cent.
Singapore is in sixth place and its investment in Australia has grown by 29 per cent in the past five years. It now accounts for 3.9 per cent of total investment.
Australia has been expanding military and strategic ties with the US in recent years, which has been viewed as a response to China's growing regional clout. But Australia's economic ties with the US tend to go under the radar.
According to a Lowy Institute survey this year on public attitudes to 19 countries, Australians feel warmest towards New Zealand, followed by the US and Japan. China is in ninth place (Singapore was not included).
An expert on Australian-American ties, Dr Brendon O'Connor, from the University of Sydney's United States Studies Centre, said US investment in Australia is largely seen as "benign". Unlike Chinese investment, American purchases of Australian companies and property do not tend to ignite controversy.
"Most people don't think about US investment," he told The Straits Times. "In practice it is a benign attitude. If people want to get worked up about foreign investment, it is usually Chinese rather than US. You could find similar examples of US investments that you don't hear about. Chinese investment taps into a certain fear."
This article was originally published at The Straits Times