Tony Abbott moves to limit Chinese sovereign investment in Australia

The Federal Opposition leader Tony Abbott says his government would have tighter restrictions on Chinese state-owned companies taking control of existing businesses in Australia, but says he supports them starting new businesses here.

Speaking in China, he warned against Chinese takeovers in Australia, but says he supported Chinese state-owned enterprises (SOEs) developing greenfield start-up businesses here, especially in mining and northern agriculture.

“It would rarely be in Australia’s national interest to allow a foreign government or its agencies to control an Australian business,” he said, mentioning that Chinese investment is dominated by state-owned enterprises.

"That's because we don't support the nationalisation of businesses by the Australian Government, let alone a foreign one."

Trade Minister Craig Emerson has criticised the speech as dangerous.

“In effect, Mr Abbott is saying to China that its investment will not be welcome in Australia. This is a dangerous and stupid thing to say,” Emerson says.

"He has made the journey to China to tell them investment by their SOEs is unwelcome," Emerson says.

"This would create Chinese perceptions of high sovereign risk in Australia, since Mr Abbott has indicated that if he became Prime Minister he would overrule a Foreign Investment Review Board finding for a Chinese SOE, and that his decision on their investment would be no."

Abbott’s deputy, Julie Bishop is co-leading a review of foreign investment rules.

“The Coalition welcomes foreign investment but the increase in sovereign wealth funds and state-owned entities in recent years has meant we, like other countries around the world, have to make sure the rules are appropriate and that there is transparency and clarity around how they are applied,” Bishop says.

“Australia has to be able to make a judgement on national interest grounds and Tony Abbott has restated our position.”

The announcement is a win for views of the Liberal senator Bill Heffernan who has long campaigned against foreign ownership, especially by sovereign-based entities.