China understands that it simply cannot buy certain Australian assets if it's not in the national interest, Treasurer Scott Morrison insists.
Mr Morrison said he made it "pretty clear" during high-level talks in Beijing over the weekend that the federal government reserves the right to say 'no'.
He, together with Trade Minister Steve Ciobo, spent days explaining and clarifying the coalition's move to set up a centre to manage certain assets and tighten regulations for overseas investors interested in them.
It followed much confusion around the decision last year to block the sale of the NSW electricity provider Ausgrid to Chinese and Hong Kong investors.
The way the Critical Infrastructure Centre works was "well received", Mr Morrison said, and was seen as a proactive way of managing such issues.
"You can't go and make those investments in China - you can't do it," he told Sky News on Monday.
"Australia does have a very liberal foreign investment regime - the most, I would argue, in this part of the world - but we always reserve the right to say no and ... on occasions you have to exercise it and I do."
