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Kidman knockback won't stifle Chinese investment, says Carr

Former Labor foreign minister Bob Carr said the Turnbull government was right to block the sale of Australia's biggest cattle station to Chinese investors, putting him at odds with his old colleagues in Canberra.

Treasurer Scott Morrison rejected the sale of S. Kidman and Co's cattle properties last month, saying it was contrary to the national interest, citing the landholding's size and proximity to the Woomera weapons testing range.

Mr Carr, who was in China following the announcement, said the Chinese understood the Coalition's decision and therefore it did not send a message that Australia was trying to limit Chinese investment.

"There was no one in China who could point to a consistent pattern of rejection," Mr Carr said. "There is so much [investment] taking place that the Kidman [decision] didn't attract negative attention; it wasn't seen as a change in policy.

"And to be to be truthful, there hadn't been much economic populism emerging in Australia; there hadn't been much in the headlines."

Among those headlines were Mr Carr's former Labor colleagues, shadow treasurer Chris Bowen and the opposition's agriculture spokesman Joel Fitzgibbon, who called for more transparency around the Kidman decision.

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The pair was concerned the Turnbull government had pandied to "self-interest" from their junior Coalition partner, the Nationals, despite accepting the concerns about Kidman being too close to Woomera.

"The fact is, the last time we had a high-profile rejection of a foreign investment application, it was a Liberal treasurer buckling under pressure from the National Party," the duo said, referring to former treasurer Joe Hockey, who blocked a takeover of GrainCorp from US agriculture giant Archer Daniels Midland in 2013.

Mr Carr said relationships were good, but that Australia could do more to welcome to Chinese investment.

For example, the government screens all potential investments from state-owned enterprises (SOEs), regardless of the transaction size: Mr Carr said decisions should be made purely on the nature of the investment, rather than the source of funding.

"If the investment were proposed in entirely a non-economic activity, it's worthy of investigation; if it's a routine commercial investment, obviously decided to enhance the balance sheet of the Chinese state-owned enterprise, then that really answers any possible questions.

"The ... test is what's the nature of the investment? If it is a pure commercial one, [then] source doesn't matter."

Mr Carr was speaking in Melbourne while launching a report from NAB and the Australia-China Relations Institute at the University of Technology of Sydney. The study compared the attitudes of Chinese and Australian business leaders towards bilateral trade.

It found the Chinese regarded Australia as the most favourable place to do business, while its economic importance was second only to the US, beating Britain, Russia and Canada.

"Occasionally we might worry that a bit of economic populism in Australia – headlines concerned about Chinese investment – could be fed in a negative way back into China and shape views of Australia," Mr Carr said. "But it doesn't seem to have been the case.

"There is a stock of a goodwill towards Australia in China which really is an open-handed invitation for us to get up there and do business."

NAB chief economist Alan Oster said while China's demand for resources was slowing – pressuring the price of Australia's most lucrative export, iron ore – services such as health, education, and in areas such as law and finance were a big opportunities for Australia.

"The Chinese secondary sector – construction, industrial output etc – is clearly slowing a lot," Mr Oster said.

"But what is often not talked about a lot is the tertiary sector, which is basically the services sector. It's currently around 50 per cent of the Chinese economy and is growing around 8.5 per cent. So if you're a service provider in Australia, that's the opportunity."

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