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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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Tony Abbott has praised communist China for lifting millions out of poverty but has encouraged its leaders to continue with political reform, arguing the country's success has come from empowering individuals to become wealthy.

The cautiously worded call to do more came in an address to the Boao business forum in southern China - Asia's answer to Switzerland's' Davos economic forum.

Hawke

Familiar faces: Bob Hawke leaves after a private meeting with Tony Abbott at the Bo'ao business forum on Thursday. Photo: Alex Ellinghausen

He said the rest of the world was ''rightly in awe'' at the way countries such as the three he had visited on this tour - Japan, Korea and China - had ''lifted hundreds of millions of people into the middle class in just a generation''.

But he used that achievement to gently encourage the next steps, which involve ceding the power of governments to the individual.

''This is the greatest and the quickest advance in human welfare of all time,'' he said.

''It's happened because governments have allowed individuals and families to take more control of their futures.''

His pointed comments contrasted sharply with the high praise heaped on the established democracies of Japan and Korea earlier in the week, suggesting Mr Abbott believes China still has a long way to go. It also echoed the more robust statements he made as opposition leader during an official visit to China in 2012.

''The question I suppose is how and in what circumstances China can and should liberalise its polity,'' he said at the time. ''As prime minister, I would hope for political reform to match China's economic liberalisation.''

But the responsibilities of government have tempered his views on investment from Chinese state-owned enterprises. Having noted in the same 2012 speech that Chinese investment was dominated by state-owned enterprises, he remarked it would ''rarely be in Australia's interests to allow a foreign government'' to control an Australian business. But in the push to clinch a landmark free trade deal with China, it is understood the Abbott government will rework its foreign investment rules to allow Chinese firms controlled by the government, but with proven credibility, easier access to Australian deals, as a sweetener for the negotiations.

Currently all investments by state-owned enterprises, no matter their value, must be approved by the Foreign Investment Review Board (FIRB). The proposed change would allow some Chinese state-owned enterprises to be treated the same as other foreign companies, triggering FIRB assessment only if they were above the value of $248 million.

The FTA is likely to see that threshold lifted to $1 billion in line with deals granted to Japan and Korea in their FTAs.

In a meeting with Mr Abbott on Wednesday, Chinese Premier Li Keqiang raised the need for Australia to ''continue to provide a fair environment for Chinese inbound investment'' in order to accelerate free trade talks.

''Signing a bilateral FTA as soon as possible is an important consensus being shared between China and Australia,'' Mr Li said, according to China's official news agency Xinhua. ''We hope both sides carry forward the talks in a pragmatic approach.''

The meeting with Mr Li was widely reported across China's state-run media, with particular emphasis on the two leaders discussing the search for the missing Malaysia Airlines flight MH370.

Mr Li, who is conversant in English, thanked Mr Abbott for Australia's efforts in co-ordinating the Indian Ocean search.

Leading a senior business delegation of top CEOs at the Boao Forum, Mr Abbott offered Australia as a ''true friend'' of China.

Invoking Deng Xiaoping, the former Chinese leader widely credited for inspiring China's first wave of economic reforms that have lifted hundreds of millions out of poverty and into a booming middle class, Mr Abbott said: ''To get rich is indeed glorious - but to be a true friend is sublime.''

''Australia is not in China to do a deal, but to be a friend,'' he said.

In a region racked with diplomatic tensions, territorial disputes and geopolitical rivalries, a consistent theme of Mr Abbott's week-long visit through Japan, Korea and China has been his desire to ''make friends rather than pick fights''.

''We don't just visit because we need to, but because we want to,'' he said. ''Our region and our world need peace and understanding based on international law and mutual respect.''

Mr Abbott's call for friendship bears some similarities to the infamous speech made by former prime minister Kevin Rudd, delivered in Mandarin, at Peking University in 2009, where he expressed the desire to become a ''zhengyou'', or a firm friend that is able to provide forthright criticism. Mr Rudd then proceeded to criticise China's human rights record. It also bears comparison to Mr Abbott's declaration late last year that Japan was Australia's ''best friend in Asia'', which raised eyebrows in Beijing.

Mr Abbott's speech, however, was altogether more cautious, emphasising the closeness of Australia and China who benefit greatly from that relationship.

''Team Australia is here in China to help build the Asian century. China, after all, has taken to heart Deng Xiaoping's advice that 'to get rich is glorious'. And China should be richer still, thanks to Premier Li's reforms.''