SYDNEY - Beijing has criticised Canberra for blocking a bid by a Chinese-linked company to boost its ownership in a rare earths supplier, an episode that underscores the challenges the two nations face in repairing ties. 

“We hope that Australia can provide a fair and non-discriminatory environment for Chinese enterprises to operate in Australia,” Foreign Ministry spokesman Mao Ning said on Friday at a regular press briefing in Beijing.

“We will resolutely safeguard the legitimate rights and interests of Chinese enterprises investing and operating abroad,” she added, without specifying any measures.

Australia recently stopped the attempt by Singapore-based Yuxiao Fund to raise its stake in Northern Minerals to 19.9 per cent from 9.92 per cent.

Company executive chairman Nick Curtis has said the fund was owned by Chinese national Wu Yuxiao, who invests in commodities internationally. 

An order prohibiting the move was officially issued by Australian Treasurer Jim Chalmers on Feb 15, based on advice from the Foreign Investment Review Board. 

Australia said all foreign investment decisions are made in its national interest and it expects trade talks with China to continue.

The South China Morning Post reported that China had protested against the decision, citing unnamed sources.

“All investment decisions are made in Australia’s interests and within the regulatory framework,” a spokesman for Australia’s Department of Foreign Affairs said in a statement to Reuters on Friday.

China’s embassy in Australia did not immediately respond to a request for comment.

Relations between the two countries have been improving after a years-long diplomatic freeze, with Australia asking China to remove unofficial “trade blockages” on its exports.

China is pressing Australia to drop its complaints over Beijing’s sanctions on barley and wine at the World Trade Organisation.

Foreign Minister Penny Wong and her Chinese counterpart Qin Gang discussed bilateral trade impediments on Thursday on the sidelines of the Group of 20 meeting in New Delhi, the statement said.

“The Australian government looks forward to continued engagement,” it said.

Ms Wong told reporters after the meeting that “both parties can grow our bilateral relationship while safeguarding our national interests, if we both navigate our differences wisely”.

While relations between China and Australia have improved following the election of the center-left Labor government in May 2022, investment remains a thorny issue.

Australia’s decision to block the rare earths deal came up in recent bilateral talks before a planned visit by Australian Trade Minister Don Farrell to Beijing, the South China Morning Post reported on Thursday.

Australia has previously said it would become more selective about who it allows to invest in its critical minerals industry, amid concern about monopolies.

Northern Minerals plans to become the first significant world producer of dysprosium, a key component for magnets for electric vehicles, outside China, which controls 94 per cent of the supply. REUTERS, BLOOMBERG