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Abbott in China: currency deal expected

The Prime Minister is expected to announce Sydney will be a trading hub for Chinese currency, China correspondent Philip Wen tell Breaking Politics.

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BEIJING - Prime Minister Tony Abbott has told Chinese President Xi Jinping that the search for the Malaysia Airlines flight MH370 is honing in on the crashed plane's black boxes.

The briefing came as the two leaders met in Beijing's Great Hall of the People on Friday.

Mr Abbott extended a formal invitation to visit Australia in November, including an invitation to address both houses of the Federal Parliament -- a gesture matching a similar invitation to Japanese Prime Minister Shinzo Abe extended earlier in the week.

Prime Minister Tony Abbott calls for tolerance toward increased Chinese ownership at the Australia Week in China gala lunch.

Prime Minister Tony Abbott calls for tolerance toward increased Chinese ownership at the Australia Week in China gala lunch. Photo: Alex Ellinghausen

The MH370 search is a major preoccupance in China, with Chinese accounting for more than half of the plane's 239 passengers and crew.

Mr Abbott told Mr Xi that he had "high-level confidence of strong detections" of the black boxes but there were huge challenges remaining in what would likely be a "long, slow and painstaking process" to locate it.

Mr Xi said he "sincerely appreciated" Australia's leading role in the search and said he "attached a great deal of importance" to Mr Abbott's visit to China, noting the 700-strong business delegation and the six premiers and chief ministers travelling with him.

Prime Minister Tony Abbott meets with the Mayor of Shanghai, Yang Xiong, on Friday April 11.

Prime Minister Tony Abbott meets with the Mayor of Shanghai, Yang Xiong, on Friday April 11. Photo: Alex Ellinghausen

It is understood Mr Abbott has told the Chinese President that four pings consistent with that of a black box had been identified and that the search area had narrowed to just a matter of kilometres.

Also understood to have been addressed in the first formal bilateral meeting between the two leaders were regional strategic issues including the crisis in Crimea and tensions in the Korean Peninsula.

Pressures are mounting within the G20 for action to be taken against Russian leader Vladimir Putin and while Australia is chairing the meeting in November, any decision to take serious action against Mr Putin, such as suspending Russia from the G20, as happened recently with the G7 group, would need China's support.

With China seen as the most influential power on the rogue state of North Korea, Mr Abbott was understood to have raised the international community's growing concern on continuing provocation and nuclear threats from the regime led by Kim Jong-un.

Earlier, Mr Abbott pleaded for a mature public debate on Chinese government ownership of Australian assets, saying it is too easy to whip up a populist storm against it.

Reversing his own long-standing opposition to Chinese government-owned enterprises investing in Australia, Mr Abbott admitted his views had changed as he pushed for a potentially lucrative free trade agreement, and urged media not to simply play the populist card when covering the issue.

“What I don’t think we ought to be doing here, is playing to the gallery back home, if I may say so,” he told reporters in China’s financial capital, Shanghai.

But his new approach of invoking "Team Australia" calls for precisely the kind of bipartisanship he was famous for denying Labor when in government.

“I don’t really think we want to be getting a shock-horror headline “the Chinese are coming” or something like that.

"What we are trying to do here is to deepen a strong friendship … to try to give both countries what has been described as a strong win-win outcome.”

Mr Abbott's clear change of heart comes as Canberra considers offering major concessions to China in a bid to unlock stalled free trade talks with Australia’s largest trading partner, after trade deals were clinched with Japan and Korea earlier this week.

The concessions are likely to include granting at least some state-owned enterprises in China, the same investment rules that apply to privately owned foreign companies wanting to invest in Australia.

The topic of investment into Australia has long been a sore point for the Chinese, looming as the main stumbling block in the protracted negotiations, now into their ninth year.

The blocking of Chinalco's investment in Rio Tinto in 2009 was a low point in diplomatic relations under the Rudd government, while China has been angered by Australia's consistent refusal to allow telecommunications giant Huawei to bid on NBN contracts.

Delivering the keynote address at an Australia Week in China lunch attended by some 1800 people in Shanghai on Friday, Mr Abbott signalled the more favourable approach with his declaration that China was already a trusted partner.

“We now appreciate that most Chinese state-owned enterprises have a highly commercial culture,” Mr Abbott told a business lunch in Shanghai on Friday.

“They’re not the nationalised industries that we used to have in Australia.”

The comments reflect an abrupt turn from his position less than two years ago, when as opposition leader visiting China, he said he could see few circumstances where Chinese state ownership of Australian companies would be justified.

"It would rarely be in Australia’s interests to allow a foreign government or its agencies to control an Australian business,” he said in 2012.

“That’s because we don’t support the nationalisation by the Australian government, let alone a foreign one.”

However he acknowledged that since coming to the prime ministership, he had learned more and had come to a different position.

“I certainly don’t walk away from things that have been said in the past, but the focus of the trip is sealing the deal, or moving towards sealing the deal.”

“I think everyone’s understanding is growing and deepening all the time."

Mr Abbott said foreign investment was a good thing even if it was not always popular.

“We know that foreign investment can be contentious and we know that it’s easy enough to whip up a storm about selling off the farm," he said.

Among other announcements during his visit was a memorandum of understanding with the giant SOE, Power China - a key investor in Melbourne's East-West Link, and a proposal to deepen financial co-operation with China, including working to make Sydney a financial hub for trade of the Chinese currency.

“We’re not there yet, but it’s a positive intention,” Gail Kelly, chief executive of Westpac said. She said it would build on last year’s announcement of a renminbi trading licence for onshore transactions and would create a pool of liquidity of Chinese currency in Australia.

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