China, Australia to cooperate on infrastructure

Reuters News
Posted: Apr 10, 2012 4:45 AM
China, Australia to cooperate on infrastructure

By James Grubel

CANBERRA (Reuters) - China and Australia agreed to work more closely on infrastructure investment on Tuesday despite Beijing raising concerns about a ban on Chinese telecommunications company Huawei from bidding for lucrative Australian broadband contracts.

China's Commerce Minister Chen Deming raised the Huawei issue during two hours of talks with Australia's Trade minister Craig Emerson in Canberra.

China said on Friday it was "deeply concerned" about Australia's decision to ban Huawei, the world's largest telecoms firm, from work on the $38 billion national broadband network due to undefined security concerns.

A spokesman for Emerson said the talks also touched on long-running free trade negotiations between the two countries, barriers to agricultural investment in Australia and World Trade Organization talks.

China is Australia's top trading partner due to its growing appetite for Australia's natural resources, with Australian exports worth more than $65 billion, or 26 percent of all exports, and bilateral trade worth $105 billion.

The two countries have had 18 rounds of negotiations on a free trade agreement, but progress has been slow with China reluctant to open its markets to Australian investment and to protect intellectual property.

Ahead of the talks, Emerson told Australia television the Huawei issue would not hurt the growing relationship with China.

"I am confident of this: irrespective of the decision on Huawei, we will have a strong, flourishing commercial relationship and a good friendship with China," Emerson said.

During his visit to Canberra, Chen and Australia's Infrastructure Minister Anthony Albanese signed an agreement on stronger cooperation on infrastructure, which could allow more Chinese investment into Australian projects.

"I think the developed world needs to come to terms with this: China and India will be net lenders in the 21st century. We're used to developing countries borrowing money from rich countries. It's going to be the other way around," Emerson said.

"So the memorandum of understanding ... will involve encouraging more Chinese investment in Australian infrastructure."

Emerson said any projects funded by China under the agreement would continue to need approval of the Australian government's Foreign investment Review Board, which can veto foreign investment on national interest grounds.

(Reporting by James Grubel; Editing by Kim Coghill)