25 June 2014
Angus Grigg
The Land
THE federal government will identify key agricultural projects in northern Australia suitable for Chinese investment as part of a broader agreement around infrastructure struck in Beijing on Tuesday.
Treasurer Joe Hockey and Trade Minister Andrew Robb said the agreement would most likely be signed in November when Chinese President Xi Jinping visits Australia for the G20 leaders meeting.
The Investment Co-operation Agreement will sit alongside the Free Trade Agreement, which the government is confident of signing by the end of this year.
“We are hopeful there will be a number of very positive announcements from President Xi’s state visit to Australia,” Mr Hockey told reporters in Beijing.
One of these could be the designation of Sydney as the next official offshore trading hub for the yuan, China’s currency.
Mr Hockey met with the chairman of China’s Central Bank, Zhou Xiaochuan, on Monday in an effort to further this deal.
The Investment Co-operation Agreement comes after Australia and China completed a “joint study” on agricultural prospects in Northern Australia under Labor.
Mr Robb singled out agriculture in the north as a key area of interest for the Chinese government. The agreement is also likely to identify rail, road, port and energy projects where Chinese companies could potentially make investments.
“The FTA sets the rules,” said Mr Robb. “In this agreement we will set out individual projects or areas of interest.”
‘Changed attitude’
Australia has indicated a willingness to be more open to investment from Chinese state-owned enterprises, which hold dominant positions in many key areas of the world’s second biggest economy.
“We have changed our attitude [towards SOEs], Mr Hockey said.
China has long complained that its giant state-owned enterprises (SOEs) are unfairly treated by Australia.
At present any deal involving an SOE is subject to automatic review from the Foreign Investment Review Board.
In 2013, Australia was the second most popular destination for outbound Chinese investment after the United States.
But Chinese investment flows into Australia declined by 10 per cent to $US9.1 billion last year, in an environment where overall outbound investment grew by 17 per cent.
The agreement will also identify opportunities for Australia investment into China. although it remains unclear how this might work, given Beijing’s restrictive policy in traditional Australian strengths like financial services, health and education
Mr Hockey and Mr Robb were in Beijing to attend the first meeting of the newly established strategic economic dialogue, negotiated by the former Gillard government. It includes an annual foreign ministers’ dialogue and a leaders’ meeting.
The economic dialogue is held with the National Development and Reform Commission, China top economic planning agency on Tuesday.
“The NDRC will be active in concluding the FTA,” Mr Robb said.
The Trade Minister said a significant portion of the meeting was spent on the FTA, which has been under negotiation since April 2005.
“The conclusion was that it could be completed this year,” Mr Robb said.
Courtesy of the Land