THE DEAL (New York) -- Chinese investors in Australia could soon find themselves on an equal footing with U.S. counterparts after Australian Prime Minister Tony Abbott told Chinese officials he would ease regulatory scrutiny in return for greater access to Chinese markets.
Speaking on Friday, April 11, at a lunch in Shanghai, Abbott said that he hoped to conclude a free trade agreement with China before November, when Chinese President Xi Jinping is due to visit Australia.
An agreement could ease restrictions on Australian exports of agricultural goods, energy and financial services to China in return for freeing private Chinese investors from regulatory scrutiny of acquisitions worth less than A$1.08 billion ($1.02 billion). Currently Chinese investments beyond a threshold of A$248 million have to be reviewed by the Foreign Investment Review Board and approved by the Australian Treasurer. Only U.S. and New Zealand investors currently enjoy the higher threshold.
"Australia hopes for much more Chinese investment - on the same basis that we welcome investment from our other FTA partners such as the United States," said Abbott.
Australia is reliant on overseas investment to fund much of its mining and energy sectors. It also needs an estimated A$1 trillion of investment to develop agricultural industries to effectively meet growing Asian demand, which could deliver as much as A$710 billion in additional revenue by 2050, analysts at Australia and New Zealand Banking Group Ltd. noted last year.
Abbott has insisted that his centrerright government is more open to foreign investment than the left-leaning predecessor it replaced in September last year. His "Australia is open for business" rhetoric has not, however, always matched reality. In late 2013, Treasurer Joe Hockey blocked Archer Daniels Midland Co.'s A$3.4 billion bid for grain transporter GrainCorp Ltd., while Abbott promised during elections to consider lowering the threshold for scrutiny of agricultural property purchases to as little as A$15 million.