Chinese investments in Australia are set to increase after the country was officially approved as an investment destination.

Australian Finance Minister Wayne Swan said in Beijing yesterday that Chinese holdings in his country could top A$30 billion (US$28.5 billion) by the end of the year, up from A$3.4 billion in 2006.

Being approved for investment under the Qualified Domestic Institutional Investor, or QDII scheme, would help both countries, Swan said. The jump in Chinese investment over the last two years was a positive sign, and Australia was open to more.

"Since we came to office, Chinese investment proposals have been approved at the rate of around one per fortnight," said Swan.

However, he warned that Australia would continue a long-standing policy of screening investment proposals to maintain its national interest.

"Most importantly, it should be consistent with Australia's aim of maintaining a market-based system in which investment and sales decisions are driven by market forces rather than external strategic or political considerations."

In February, Swan said state-owned foreign investors should demonstrate clear commercial objectives and remain at "arm's length" from their government.

He recently approved an investment by the Chinese steel company Shaogang Group in Australian iron-ore mining company Mt Gibson Iron.

Chinese investment in Australia was also boosted by Aluminum Corp of China Ltd's purchase of a 9-percent stake in Rio Tinto.

China's QDII scheme was launched in April 2006 to allow mainland investors to diversify their investment channels and get access to overseas markets, including the United States, Japan, South Korea, Russia and some European countries as well as China's Hong Kong.

However, some funds under the scheme have dropped below their face value because of the US subprime mortgage crisis.

(Shanghai Daily June 11, 2008)