Australia to cash in on China's economic growth(2)

Earlier this year, China and Australia signed a $31 billion currency swap agreement, in a bid to promote bilateral trade and investment.

While the Chinese government has encouraged domestic companies to invest abroad in recent years, Australia has witnessed the fast growth of capital inflow from China.

In 2011, China's outbound direct investment in Australia surged 86 percent year-on-year to $3.17 billion, according to the Ministry of Commerce. By the end of 2011, China's cumulative outbound direct investment, or ODI, in Australia accounted for 92 percent of that in Oceania.

"Many probably ignore the fact that China's investment scale in Australia is so small. China's ODI in Australia accounts for merely 2 to 3 percent of Australian foreign direct investment," Chen said.

So the ambassador believed there is a lot of room for the Chinese investment to grow. "Nobody from the two sides should doubt the growth. And the Australian government should encourage and support Chinese investment," he said.

While Chinese companies rack up investments in Australia, doubts over Chinese investment deals have surfaced in recent years.

But Chen said they are individual cases. "The majority of Australians, including the politicians, domestic companies and local people, welcome Chinese investment, as Chinese investment creates benefits for both sides," he said.

In July, opposition leader Tony Abbott raised concerns about investment proposals especially by Chinese State-owned enterprises, saying the Chinese investment is complicated. "It would rarely be in Australia's interests to allow a foreign government or its agencies to control an Australian business," Abbott said.

Earlier this year, Chinese telecom equipment provider Huawei Technologies missed out the bidding for the planned national broadband network by the Australian government because of information security concerns.

At the end of August, Australia approved a bid by Chinese textile group Shandong Ruyi for cotton farm Cubbie Station, which covers almost 1,000 square kilometers of southwestern Queensland state. But this ignited new concerns about Chinese investment in agriculture.

"From what I know, the investment environment in Australia is fairly nice and favorable," Chen said.

　According to the Ministry of Commerce, about 70 percent of the Chinese cumulative ODI in Australia by the end of 2011 went to mining, and 16 percent of the investment was made in the commercial services sector.

Chen Gong from Anbound Group said "there are misunderstandings and prejudice against the Chinese investment for political and cultural reasons," but "it's not a severe problem".

"Chinese companies need to communicate and interact more with relevant authorities or communities to speak the truth about themselves," he said.

A recent report by KPMG and the University of Sydney urged Australian policymakers to create favorable conditions for Chinese State-owned enterprises and foreign companies, rather than object to them, because no research shows the Chinese SOEs are different from multinational companies.

Lowy Institute, an independent think tank on Australian international policy, said in a report that the majority of Australian interviewees believed there was excessive Chinese investment in Australia, but Lowy's statistics showed China lags far behind the United States, the United Kingdom and Japan, ranking 13th in terms of cumulative investment in Australia.

Experts urged the two nations to accelerate steps on concluding China-Australia free trade agreement talks to boost bilateral trade and investment.

China and Australia started discussions on the bilateral FTA in May 2005, and talks are still going on. In March, the 18th round of talks was held in Australia.

Estimates from Australia are that a bilateral FTA would help generate additional revenues of A$146 billion ($145.5 billion) for the country in the next two decades.

"The two sides are sincere and willing to sign the FTA, and rounds of negotiations have witnessed remarkable progress. So far, the two countries have reached consensus on majority issues," Ambassador Chen said.

Insiders said they are not optimistic on ending the talks this year, citing Australia's unwillingness to remove investment barriers for Chinese companies.

"It's never easy to conclude a deal like this, as there are always sensitive issues concerning the deal," Chen said.