'We can withstand economic pressure from China'

AUSTRALIA will be able to resist Chinese attempts to use its new economic muscle to win Canberra over, a new report finds.

AUSTRALIA will be able to resist Chinese attempts to use its new economic muscle to win Canberra over to Beijing's side on diplomatic and other issues, a new report finds.

"Fears that China's government will manipulate its trade and investment to undermine Australian autonomy or security are overblown," says Sydney University senior lecturer James Reilly.

In China's Economic Statecraft, published yesterday by foreign policy think tank the Lowy Institute, Dr Reilly cites a parliamentary speech by Kevin Rudd in 2011: "In quality, price and proximity, the iron ore Australia provides to China is without peer, and not easily replaceable on the world market."

Australia is China's top source for mineral ores and coal, its second-largest source of liquefied natural gas, and sixth source of fuels overall.

The report says Australia has "shown a willingness to act in cases where Chinese investments raise concerns over national security".

It quotes the examples of the blocking of the Minmetals bid for OZ Minerals because the latter's Prospect Hill mine was near a South Australian defence facility, and the rejection by Labor and Coalition governments of Huawei's involvement in the National Broadband Network rollout.

The report concludes that while "economic statecraft is an important tool of Chinese foreign policy . . . it should not be used as an excuse for opposing . . . engagement with China".

It notes that China has become the largest trading partner for more than 100 countries -- including Australia.

"Growing economic dependence upon China has exacerbated anxieties around Asia, spawning popular backlashes and strategic balancing," it says.