Hangzhou: Chinese President Xi Jinping has directly implored Prime Minister Malcolm Turnbull to ensure Australia provides a "fair, transparent and predictable" policy environment for foreign investment, as the rift over the decision to block a Chinese bidder from acquiring electricity network Ausgrid and maritime tensions in the South China Sea shadowed the pair's meeting on the sidelines of the G20 summit in Hangzhou.
The details of the 20-minute, closed-door meeting at the picturesque West Lake guesthouse on Sunday were briefed by the Chinese foreign ministry, underlining the level of scrutiny Beijing has attached to the decision to block the state-owned State Grid from making the acquisition.
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Turnbull goes to China
China is hosting the G20 meeting of the world's most power nations. (Video courtesy ABC News 24)
China "hopes the Australian side continues to dedicate itself to providing foreign investors a fair, transparent and predictable policy environment", the foreign ministry cited Mr Xi as saying. "This also accords with Australia's own interests."
China has accused Australia of bowing to protectionist sentiment for blocking the bid, as well as for an earlier decision against a Chinese-led consortium to buy cattle company Kidman & Co. Both decisions were made on national security grounds.
"The issue of investment was certainly raised," Mr Turnbull told reporters in Hangzhou on Sunday, adding that Mr Xi did not raise specific projects. "But China understands as well, if not better than anyone, our sovereign right to determine who invests in Australia and the terms on which they invest."
Mr Turnbull reiterated it was "a lot easier" for a Chinese company to invest in Australia than the other way around, while pushing for China to push ahead with promised economic reforms that would further open up its markets.
In a busy schedule before heading for the East Asia Summit in Laos on Tuesday, Mr Turnbull also met with Indian Prime Minister Narendra Modi and addressed an audience of business leaders at the concurrent B20 summit in Hangzhou on Sunday, where he warned business leaders of the rise of populist politics and protectionism in many nations due to the unprecedented pace and scale of the global economy brought on by digital disruption and globalisation.
"We face a fundamental challenge of restoring public trust in economic reform, in open markets, in trade," he said, stressing that cracking down on multinational tax avoidance was central to restoring public trust in global corporations.
Mr Turnbull used the brief bilateral meeting with Mr Xi to reiterate Australia's position on the South China Sea and "the critical importance with complying with international law" and for disputes to be settled peacefully and with restraint.
It followed from US President Barack Obama's call on China, during a meeting with President Xi on Saturday, to abide by an international ruling by a tribunal in The Hague in July which ruled China had no historic title over the waters of the South China Sea and had infringed on the rights of the Philippines by building man-made islands in the disputed waters.
China has been keen to use its turn as host of the prestigious global summit to project its status as a major world power. But Mr Obama's arrival in Hangzhou on Saturday was marred by high-profile departures from protocol, prompting questions of a deliberate snub ahead of what was likely the final meeting between the two leaders before a new president is installed in the White House.
On his arrival on Air Force One, there was no rolling staircase for Mr Obama to descend in view of television cameras. Instead, he emerged from a door in the belly of the plane usually only used during high-security trips, such as those to the Middle East. Chinese officials then attempted to prevent travelling US journalists from witnessing their president's disembarkation, sparking angry confrontations of Chinese government officials with White House press aides and top national security adviser Susan Rice.
An unusually lengthy readout from the White House stressed the United States' commitment to its allies in the region and the continuation of the Obama government's signature pivot to Asia, viewed by Beijing as an overt attempt to contain its military and strategic rise.
"The US presence in Asia and the Asia-Pacific will be strong," Mr Turnbull said. "It will be by far the strongest military presence for a very, very long time."
It is also understood Mr Turnbull raised with Mr Xi the issue of human rights in China amid what western diplomats and international rights groups describe as the harshest crackdown on civil rights in decades. He also raised the cases of Australians on serious drug charges in China who may face the death penalty.
While in Hangzhou, Prime Minister Malcolm Turnbull also discussed a free trade agreement with his British counterpart, Theresa May, and said Australia had sent trade negotiators to Britain to help begin work on the deal.
Australia will "enthusiastically" enter into negotiations on a free trade agreement with Great Britain, its first new trade pact since the Brexit vote.