oneworldtalk

THE Chinese Vice-Premier, Li Keqiang, told a room filled with pro-China business heavyweights yesterday that Australia and China needed to ''reduce mistrust'' and work out their differences.

Mr Li, seated next to former prime minister Bob Hawke, told an audience including the mining magnate Clive Palmer that the purpose of his visit was to look to the future of the Australia-China relationship.

He called for enhanced dialogue ''and properly handling our differences so as to ensure that our bilateral relationship is not deviated … because of a particular incident at a particular time''.

Mr Li is the most senior Chinese politician to visit Australia since the relationship with China soured after the detention of Australian businessman Stern Hu this year and political debate over Chinalco's aborted attempt to invest in Rio Tinto.

In his only public speech, he offered a carrot for better ties by talking up the prospect of progress on long-stalled free trade agreement negotiations. He said China had the political will to reach an agreement and Australia was the strongest and largest economy among its potential free trade partners.

''For those existing problems in our negotiations … [we] should have a sense of urgency to resolve them,'' he said.

But Mr Li also called on both governments to ''oppose various forms of protectionism'' and said he hoped Australia would ''continue to promote a non-discriminatory policy on foreign investment''.

Tension continues to surround the increasing interest by Chinese state-owned companies in acquiring stakes in Australian miners.

Mr Palmer said he had received death threats since speaking out in favour of Chinese investment, which he says creates Australian jobs.

Mr Palmer said the Chinese see the Foreign Investment Review Board as ''a very racial policy'', but believed there had been a recent ''softening'' in the board's approach. Last week the Chinese coal producer Yanzhou gained FIRB approval to acquire the miner Felix Resources.

''The policy seems to be changing. We pointed out it was a racist policy. I think the vice-premier pointed out he didn't want to see racism stand between us,'' Mr Palmer said. However, the chairman of the Australia China Business Council, Frank Tudor, said the FIRB's approach to Chinese investment ''will never be totally black and white''. He welcomed Mr Li's comments on the free trade agreement as positive.

Mr Li signed agreements yesterday on education and illegal logging with the Deputy Prime Minister, Julia Gillard, before meeting the Prime Minister, Kevin Rudd, in Canberra.

''The worst of the difficulties are behind us now,'' Mr Hawke said. ''I think it is an intelligent assessment by both countries that we are important to each other and the economic welfare of each of the countries is likely to be optimised if we have the most effective possible relationship.''