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Most Australians mistakenly think China is largest source of foreign investment, poll finds

<span>Photograph: Mick Tsikas/AAP</span>
Photograph: Mick Tsikas/AAP

Just one in six Australians can correctly nominate the United States as the largest source of foreign investment, a new poll suggests, at a time when public debate has focused heavily on China’s economic reach.

The finding follows fresh warnings from Australian exporters that it would be “very costly” for the country to turn its back on China as a key export market despite the current turbulence in the relationship.

The University of Sydney’s United States Studies Centre said in a report, released on Thursday, that a poll of 1,054 Australians revealed “good public understanding of Australia’s trade relationships but widespread ignorance about international investment”.

The survey, conducted for the centre by YouGov, showed 81% of respondents correctly ranked China as Australia’s largest overall trading partner when presented with four leading options.

But when asked which of four countries was Australia’s largest source of international investment, only 17% correctly nominated the US, while the vast majority – 71% – thought China was top of those rankings too.

Just 8% of those surveyed correctly placed China as being below the US, the United Kingdom and Japan. The survey question had explained that international investments included buying land, property, shares and financial instruments.

“While there have been some high profile and controversial Chinese investments in Australia, the flow of Chinese investment in Australia has never exceeded that from the United States,” stated the report entitled Enduring Partners: the US-Australia investment relationship.

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More than one out of every four dollars invested in Australia from overseas comes from the US, with such US investments totalling $984bn.

The report’s author, David Uren, a non-resident fellow at the US Studies Centre and a former economics editor for the Australian newspaper, wrote that businesses in both the US and Australia are looking to each other’s markets for stability and strength “in an increasingly fractious global economy”.

US investors, he suggested, have been drawn to Australia’s resources and services sectors, which have benefited from exposure to Asian markets.

Investors have also gained certainty from the free trade agreement between Australia and the US that came into force 15 years ago, along with the long-standing security alliance and the cultural affinity between the two nations.

But the report points out the United States’ share of Australia’s goods exports has halved from 8% to 4% since the free trade agreement came into force, amid increased trade with a growing China.

Uren warned Australia is “exposed to collateral damage” from the Trump administration’s pursuit of bilateral deals, with China committing to lift its purchases of US goods by US$200bn ($284bn) over two years.

Early evidence of “the danger for Australia” was China’s decision to open the door to barley imports from the US about the time Beijing imposed steep tariffs on Australian barley.

“There is potential for broader disruption as China attempts to meet its obligations,” Uren wrote.

Assessing the trade outlook more broadly, he said nations almost everywhere were “resorting to protectionist measures of some sort to defend the export-exposed sectors of their economies” and Australia must resist those pressures.

The Export Council of Australia told a parliamentary inquiry on Wednesday export businesses were now trying to “manage the reverberations” of the trade tensions with China.

Arnold Jorge, one of the council’s representatives, told the committee looking into diversifying Australia’s trade and investment profile that businesses needed to “take account of the trade wars that are taking place right now”.

Exporters had reported it was “very difficult to do business in this kind of environment”.

“They have conveyed to us that they are trying to manage the reverberations and looking at, I guess, alternative options,” Jorge said.

But the reality was many firms with long-term contracts were not able to switch to alternative customers and were “trying to ride this particular wave” of trade tensions.

While he understood the calls for a new approach, Jorge said China’s economic size and growth meant it was “a market we cannot ignore”.

“We definitely need to maintain the trading relationship where we can with China and with other existing major trading partners … abandoning those markets would be very costly,” Jorge said.

“We’re not suggesting to abandon our existing partnerships with current markets, but rather to look at other opportunities elsewhere as well. We think we can potentially do both.”

Jorge said efforts to diversify and grow Australian exports should focus on small and medium enterprises that may be “more flexible” and “agile” in shifting to new export markets.

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The Australia China Business Council, whose members include Australian companies seeking to do business with China, argued a “forced diversion of trade away from China” would be costly.

The council’s national president, David Olsen, told the inquiry a long-term approach was needed at a time of economic uncertainty. He called for a “China-plus strategy” where Australia reaffirmed the existing relationship but also actively sought new markets.

Bryan Clark, the director of trade and international affairs at the Australian Chamber of Commerce and Industry, called on the government and industry to develop opportunities in the Indian Ocean rim, noting there were three billion people in nations from Indonesia to South Africa.

“We neglect them at our peril,” Clark said.