Prime Minister Tony Abbott wants more investment from China, and admits his stance on state-owned enterprises has evolved.
The Abbott government is considering ways to make it easier for Chinese state-owned enterprises to do business in Australia in a bid to drive foreign investment from its largest trading partner.
Prime Minister Tony Abbott wants to convince China that the enterprises are welcome, with concerns in Beijing over foreign investment rules a major sticking point in negotiations for a trade agreement.
The majority of Chinese companies investing in Australia are not private but state owned.
All applications from such enterprises are automatically scrutinised by the Foreign Investment Review Board, and there’s no suggestion those rules could be changing.
But it’s understood the government could be considering an arrangement where enterprises that have proven to be good corporate citizens could receive preferential treatment in future applications.
Mr Abbott admits his position on the issue has shifted.
In 2012, as opposition leader, he said it would rarely be in Australia’s national interest to allow a foreign government or its agencies to control a local business.
Now he concedes he knows a lot more about how business is done in China.
In a major speech to business and political leaders in Shanghai, Mr Abbott said he appreciated Chinese state-owned enterprises had a “highly commercial culture”.
“They don’t normally operate in the kind of way that a nationalised industry might have operated back in Australia,” Mr Abbott said.
More than half of all Chinese investment into Australia goes to Western Australia.
Not surprisingly, WA premier Colin Barnett welcomed the prospect of making it easier for SOEs to invest.
“I’ve found them to be very responsible corporate citizens within Western Australia,” he told reporters in Shanghai, adding he would like to see a change in that area.
Mr Abbott has said he wants to give China the same access to Australia under a trade agreement as it has its other trading partners.
This means investment proposals would only be scrutinised if they exceeded $1 billion – not $248 million as exists now.
China would have to accept that any farm or agribusiness buyout above $15 million would be reviewed, terms accepted by Japan and South Korea.
Beijing wants an even playing field, and trade officials say with Japan and South Korea on equal terms, China could warm to a deal soon.
Mr Abbott said he understood foreign investment could be a contentious issue, and it was easy to whip up fears about “selling the farm”.
But nothing had been set in stone, he warned, nor would he preempt the outcome of trade negotiations that have dragged on for nearly 10 years.
“I don’t really think we want to be getting a shock horror headline, ‘The Chinese are coming’, or something like that.”
Mr Abbott wants a trade deal with China by the end of the year, and has been personally assured by Beijing that China was equally keen to accelerate talks.