Australia to benefit from China's increased foreign investment

Australia is set to benefit from China's announcement of the country's largest ever overseas investment program, economists said Tuesday.

Although China is yet to disclose exactly where the government funding will be directed, it is a move that is set to see billions of dollars injected into the Australian economy over the next year.

That is due to the historic free trade agreement signed between the two countries following G20 meetings last year that, according to Qinghua University economics director He Maochun, is worth up to 130 billion U.S. dollars per year.

"China can provide capital, producing capacity and equipment to help Australia optimize its economic structure," he told News Corp Australia, one of the country's largest media companies.

"China also needs agricultural products, mechanism as well as environmental protection technology from Australia.

"In the long-term, the two sides could build up a closer and freer trade relationship."

China will use its increased investment to continue exports of heavy machinery, authorizing large manufacturing companies to send products overseas in order to work on certain projects.

According to HSBC Australia's China desk leader, Leon Li, it is one of a number of ways in which the Chinese market is capitalizing on last year's free trade agreement with Australia.

Li revealed that there had been a steady increase in investment in Australia from Chinese companies since the free trade deal signed in November last year.

"We are seeing increased interest from Chinese investors, particularly in Australian ports, roads, mining and power infrastructure," he said.

"In Australia, they see the combination of significant investment opportunities, a stable political environment, a mature legal system and sustainable investment returns relative to other markets."