PRIME Minister Julia Gillard has reassured Chinese government and business leaders Australia is open to foreign investment and wants to expand its economic relationship.
Ms Gillard also announced on Monday an historic deal to allow the direct trading of the Australian and Chinese currencies for the first time, after months of high level negotiations.
The Australia dollar will join the Japanese yen and the US dollar to become the third currency to enjoy the benefits of direct yuan trading, which should make business transactions easier and offer better rates to tourists.
“This is a huge advantage for Australia,” Ms Gillard told reporters in Shanghai on Monday.
The prime minister is now halfway through her China trip and on her way to Beijing, where she will meet with Premier Li Keqiang.
When she meets Premier Li, Ms Gillard is likely to again raise concerns about an escalation in North Korea’s anti-US and South Korean rhetoric, which is raising fears the North could start a war on the Korean peninsula.
But ahead of that meeting on Tuesday, Ms Gillard addressed a Chinese central government run institution that trains senior party leaders and top business executives in the Shanghai financial district of Pudong.
There, Ms Gillard was asked about the foreign investment debate in Australia, after Nationals Senator Barnaby Joyce earlier on Monday said not all investment by China was in the national interest.
She defended Australia’s foreign investment regime.
“We are a capital hungry economy, we need inwards investment,” Ms Gillard told the China Executive Leadership Academy on Monday.
Investment in Australia is a touchy issue in China after a series of outbursts by some commentators, particularly over buy-ins of rural and mining assets by Chinese state-owned enterprises.
Senator Joyce last year criticised the sale of Queensland cotton farm Cubby Station to a Chinese dominated consortium.
During Labor’s term in office, 380 investment proposals from Chinese companies had been accepted.
“Only six of them had conditions put on them and none – not one – has been rejected,” Ms Gillard said.
The prime minister also encouraged China to open up its economy further to foreign businesses and drive social reform, citing Australia’s own journey to modernise.
She pointed to Australia’s decisions to float its dollar, cut tariffs and open up its financial sector to foreign competition.
“Australia is a stronger, fairer, smarter nation as a result,” she said.
Ms Gillard emphasised the need to build a deep and liquid market in Australian dollar-Chinese yuan trading.
On Wednesday, ANZ and Westpac will be the first Australian banks to directly trade the currencies on the Chinese foreign exchange market after receiving licences from the People’s Bank of China.
Westpac chief Gail Kelly and ANZ boss Mike Smith, who joined Ms Gillard in Shanghai, said the currency initiative would help drive deeper business ties with China.
OzForex chief currency strategist Jim Vrondas said the move could cut business transaction costs by thousands of dollars and should give Australian tourists to China a better rate. – AAP