Warning to ease China trade hurdles

Senior Australian and Chinese business leaders say Australia is in danger of losing its competitiveness in China in a warning that comes as that country embarks on a new global investment spree.

Chinese President Xi Jinping has said that in the next five years his country plans to import $US10 trillion worth of goods, invest $US500 billion overseas and send 400 million tourists.

At the inaugural Senior Business Leaders Forum held in Hainan Province as an adjunct to the annual Boao Conference Forum, 23 business leaders from both nations discussed ways to improve business relationships.

A key message was that Australia was important to China but more needed to be done to remove obstacles to Chinese investors.

Fortescue Metals chairman Andrew Forrest, who is a co-chairman of the SBLF, said improving relations between both countries was vital. He said Australia was China's largest supplier of resources and after more than 40 years of diplomatic relations and an early mover advantage, relations should have progressed further.

"We seem to be losing our competitive position," he warned. "Other nations have moved up in importance." Iron ore from Australia accounts for more than half China's annual imports.

Li Ruogu, the chairman of the Export-Import Bank of China, said national security issues were making it difficult to invest in Australia. He said investments were commercial and therefore should not be viewed as having political, military or security issues. "They are purely economic business proposals," Mr Li said.

"There are no serious national security issues," he said.

Chinese technology giant Huawei was unofficially banned from supplying to the national broadband network (NBN) in late 2011 on unspecified national security concerns. The exclusion of Huawei has continued to be a source of tension between the two countries.

Wang Boming, chairman of SEEC Media Group, which publishes one of the country's most influential business magazines - Caijing - said in the next decade Chinese companies planned to spend a lot of money on overseas investments and "investments in Australia could be very big in the next five years".

He said 80 per cent of investments would come from state-owned enterprises. "Now state-owned enterprises are learning to be minority shareholders," Mr Wang said.

Prime Minister Julia Gillard, who was also at the forum, strongly condemned the attitude of the Coalition to foreign investment in Australia by China, saying Tony Abbott's policies would hurt investment and derail negotiations with China for a free-trade agreement.

Last year when he was visiting China, Mr Abbott said: "It would rarely be in Australia's national interest to allow a foreign government or its agencies to control an Australian business."

Trade Minister Craig Emerson, who is attending the Boao conference, said Australia's track record showed it welcomed foreign investment. No investments have been knocked back in the past decade but a number have been required to accept certain conditions.

China has been Australia's third largest foreign investor for four consecutive years, according to data compiled by Treasury.

After the meeting Mr Forrest said the Chinese and Australian business leaders signed a memorandum of understanding, which included agreeing to form working parties in areas including financial services to help Chinese and Australian businesses improve their understanding of the investment climate in both countries.