China trade deal carrot

Andrew Probyn Federal Political Editor SanyaThe West Australian
China's Premier Li Keqiang and Australian Prime Minister Tony Abbott in Sanya, Hainan province, yesterday.
Camera IconChina's Premier Li Keqiang and Australian Prime Minister Tony Abbott in Sanya, Hainan province, yesterday. Credit: REUTERS/China Daily

The Abbott Government will move to overhaul foreign investment rules significantly for Chinese Government companies as a way to kick-start multi- billion-dollar free trade talks.

_The West Australian _understands the Government will ease the mandatory approval process for state-owned Chinese companies that are already known and trusted in Australia.

This could include companies listed on international stock exchanges for a considerable time, such as 10 years, or those that already have sizeable investment profiles in Australia.

Instead, their investments would face Foreign Investment Review Board scrutiny only if they were above the trigger for non-government foreign investment, currently $248 million.

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It is understood the zero threshold for FIRB scrutiny might be lifted altogether for state-owned companies in greenfields projects that would otherwise not be developed.

Inside Government, the example being cited is the Sino iron ore project in the Pilbara, which would not have got off the ground without the multibillion-dollar investment of state-controlled Chinese company Citic-Pacific.

In the week when Prime Minister Tony Abbott struck a free trade agreement with Japan and finalised an FTA with South Korea, China is demanding to be treated equally.

It wants the FIRB threshold for Chinese companies lifted to $1 billion, as in the Japan and South Korea FTAs.

The coalition's policy is to reduce FIRB thresholds to $53 million for agribusinesses and $15 million for agricultural land.

In its FTA negotiations with China, the Government will be mindful that the Nationals will likely oppose any major change from this policy.

Mr Abbott met Chinese Premier Li Keqiang in Sanya last night before today's Boao Forum.

Both emphasised their determination to conclude a "high quality" FTA as soon as possible to increase two-way trade, investment and people-to-people links.

Behind the scenes, officials are optimistic a China FTA can be struck within months, not years.

Australia wants to take advantage of Mr Li's economic reforms that promise to open China to competition in financial, legal and accounting services.

Australia also wants major concessions for dairy exports that are at least equal to those in New Zealand's 2008 FTA.

In his speech to the Boao Forum, Mr Abbott will acknowledge China's spectacular post-war transformation, which is "unparalleled in history".

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