The federal government is being advised to address growing mistrust over China if it wants to sign a free-trade agreement (FTA) with the Asian powerhouse within a year.
Trade Minister Andrew Robb has just returned from East Asia, where he met with Chinese officials to discuss progress on the long-sought FTA.
Securing an FTA with Australia's largest trading partner has been on the agenda since the Howard years and the present government has fast-tracked talks and wants a deal done within 12 months.
But China's expansion is fostering suspicion in Australia, with concerns it could use its significant economic influence to steer negotiations in its favour.
The Lowy Institute think tank has warned sentiments toward China has "cooled" in the past year and the government needs to be on the front foot if it wants public support for the elusive FTA.
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The institute's James Reilly says fears China's government will manipulate its trade and investment to undermine Australian autonomy or security are "overblown".
"Both sides need to do a better job of explaining this reality to the Australian public," he wrote in a report called China's Economic Statecraft: Turning Wealth Into Power.
"The Abbott government will also have to pay more attention to public sentiments at home if it wishes to get a trade deal with China within the year."
A good place to start would be dispelling concerns about Chinese investment in Australia, which makes up just three per cent of all foreign direct investment.
In a survey conducted this year, the institute found that despite this, 57 per cent of Australians believed the government was allowing too much investment from China.
A sizeable minority of those surveyed also saw China as a potential military threat in coming decades.
China's use of economic statecraft - using economic clout to further its foreign policy objectives - would hit a wall if tried on Australia, the report said.
One fear is China could pressure the government over its military co-operation with the United States, or engagement with Taiwan, by holding hostage primary Australian exports - like iron ore.
But the report claims Australia enjoys "considerable economic leverage over China", and while economic statecraft posed challenges, it was no excuse for opposing deeper ties.
Mr Robb said China was "very enthusiastic" about the FTA proposal and he was hopeful a deal would be signed within the 12-month deadline.
"Where there's a political will, there's a way," he told ABC TV on Wednesday.
