The federal government may consider easing restrictions on Chinese investment in Australia as part of a renewed effort to secure a free trade agreement (FTA) with the world’s most populous country.
The Australian reports that Prime Minister Kevin Rudd has put a comprehensive free trade agreement with Beijing back on the agenda as the government tries to bolster the Australian economy amid declining revenues and an uncertain resources sector outlook.
Under former Prime Minister Gillard, the federal government free trade talks had reached a stalemate and Australia was pursuing a reduced form of free trade focused on agriculture given that it had refused to ease Chinese investment access.
However, according to Australian, the new Trade Minister Richard Marles is to soon fly to China to discuss a free trade deal and said that China is particularly interested in raising the threshold at which non-state investments are referred to the Foreign Investment Review Board.
As it stands, privately-owned Chinese companies can invest $248 million in Australia without it being reviewed by the Foreign Investment Review Board (FIRB). And, in the case of Chinese state-owned enterprises, all investments must be approved by the FIRB.
However, the United States and New Zealand can invest more than $1 billion in Australia without being scrutinised by the FIRB.
In a phone conversation earlier this month, Prime Minister Kevin Rudd and Chinese President Xi Jinping both expressed a desire to conclude a free trade agreement between the two countries.
Marles told The Australian that the government was prepared to look at the FTA "in a fresh light" and negotiate in a "practical and pragmatic" way.
"The future of our economic relationships with China is going to shift from being one based on resources – although it will obviously still have a very large resources component to it – to one that has a much bigger goods and services component," he said.
"If we were able to make progress on an FTA with China that would be a very significant contribution to the Australian economy given how important providing goods and services to the growing Chinese middle class is going to be for the future of the Australian economy and future prosperity in Australia."