Unfettered investment by state-owned enterprises is a development that remains politically sensitive in Australia

This article is more than 6 years old

This article is more than 6 years old

Tony Abbott has again signalled his government will look to strike a special deal to approve more investment in Australia by Chinese state-owned enterprises if China signs up to a broad-ranging free trade pact. 



The prime minister has used a speech in Shanghai to confirm that Australia will offer the Chinese the same preferential deal on foreign investment by private firms as it has already granted America, Japan and South Korea in bilateral free trade pacts.  Those deals create a new investment threshold of $1.08bn before Foreign Investment Review Board (Firb) scrutiny is triggered (up from $248m). 

But given that most Chinese investment is from state-owned enterprises, and the Firb scrutinises all of those investments regardless of monetary value, the preferential $1.08bn threshold in the other major FTAs is not practically beneficial. 

A key difficulty in the current negotiations between Canberra and Beijing is crafting a provision which would allow more unfettered investment by state-owned enterprises (SOEs), a development that remains politically sensitive in Australia. 

Abbott offered the following positive formulation on SOEs in Shanghai on Friday, a clear signal about Australia’s disposition in the talks. 

“We now appreciate that most Chinese state-owned enterprises have a highly commercial culture.  They’re not the nationalised industries that we used to have in Australia.” 

Abbott also repeated a message he has been trying to send to Chinese officials throughout his north Asian visit: the coalition government has not rebuffed any specific proposals from Chinese SOEs, and remains positively disposed to Chinese investments in infrastructure. 

“Australia has never rejected any investment application from a Chinese SOE and recently approved a large SOE investment in critical infrastructure,” Abbott said on Friday. 

The prime minister said he welcomed China’s commitment to accelerate the FTA talks, and said he hoped they might be concluded by the time China’s president, Xi Jinping, visits Australia in November. 

Abbott used the speech to emphasise that the relationship was more than a transactional economic partnership.  He pointed to high levels of migration, large numbers of foreign students, and a growing tourism industry. 

The prime minister said he was also hopeful of expanding defence cooperation. 

“It’s my hope, following military commission vice-chairman General Fan’s visit this year, that Australia and China might expand our defence contacts to officer exchanges and more participation in exercises, including trilateral ones,” Abbott said. 

He is now on his way to Beijing for talks with the Chinese president. 

The Australian prime minister will dine on Friday evening in the Great Hall of the People.