The level of work for Australian firms in China shows no signs of slowing down, with some on the ground predicting outbound investment from the People’s Republic likely to surpass inbound in the next three years. “It’s inevitable that with the reforms going on in China that there will be a tipping point soon,” said David Olsson, partner at Mallesons Stephens Jaques, Beijing. “It would not surprise me if outbound investment surpasses in-bound investment in the next three years. But, it is dependent on external global forces, and local forces such as a change in leadership.”

A senior Ministry of Commerce official, Zheng Chao, told China Daily that outbound direct investment is set for the fast track and will grow by between 20% to 30% in the next five years. Global foreign investment shrank by 40% in 2009 as a result of the global financial crisis; but China's outbound investments in the non-financial sector increased by 6.5% to US $43.3bn that year. This meant China rose three places to ninth in the global investment league. In 2010, China's outbound direct investment in the non-financial sector jumped 36% to US$59bn.

The investments are a result of China’s emphasis on growing domestic consumption, said Olsson. “China now realises that it needs to generate growth through domestic consumption, because the of GFC,” he said. In order to do this they need to have world class corporations operating in China and throughout the world. “They must continue to invest abroad to get access to those raw materials, agriculture and technology,” added Olsson.
 
Australia and Australian law firms are in prime position for this investment according to Olsson. “Australian firms are placed very well, because of the strong ties between China and Australia," said Olsson. Mallesons opened the Beijing office eighteen years ago and since then it has tripled in size; however they are not the only ones capitalising on the increased work available through Chinas expansions. “China is a very competitive legal market at moment. There are a lot of firms tracking the Chinese outbound investment, wherever it may go,” said Olsson. A majority of the work associated with those investments is M&A, but there is also a lot of finance work, says Olsson. “A significant part of what I do is act for Chinese banks which are providing finance for the companies investing in Australia and elsewhere. We have also been acting for Australian banks financing projects in China,” he said.

Indeed, while outbound investments by China have received much of the press in recent time, Olsson says inbound remains important to the firms on the ground in China. “We have had a steady growth in instructions from Australian and international firms looking to invest in China,” he said. As more companies from Australia and abroad joining forces with Chinese based organisations, it’s likely there will be a growth in litigation in the market in the near future, providing a new work stream for firms on the ground, says Olsson.