Sydney is positioning itself to cash in on the announcement of Australia's central bank RMB exchange, despite concern over the federal government's erratic approach to foreign investment.

The 30 billion Australian dollars or 200 million RMB agreement signed last month by the Reserve Bank of Australia and the People' s Bank of China is the largest such deal with any western nation.

But according to Andrew Stoner, Deputy Premier of New South Wales, Australia shouldn't think of itself as a western nation, but rather be positioning itself as part of Asia's economic neighborhood. "The recent announcement by the Reserve Bank in terms of trade with China through the RMB is incredibly important for Sydney as part of the Asia-Pacific region. To streamline trade and financial transactions between Australia and China, Sydney will be the beneficiary as the major financial centre of Australia but if we' re truly to be part of the Asia-Pacific I think this is a great move," Stoner, minister for trade and investment of the state, has said.

The Australia New Zealand bank (ANZ) chief executive Mike Smith has said Australia was fortunate to sit on the cutting edge of RMB ' s internationalization and the two-way trade dynamics made for a ' natural hedge'on the currency.

"Australia is more fortunate in that it has deeper access to RMB in terms of its imports and exports than many other countries because of the huge amount of export trade," Smith said in a statement."It makes sense for an Australian bank to be a major player in RMB as the currency develops and through this first stage of internationalization."

Speaking at the Sydney-Shanghai Symposium, Stoner said the swap agreement would enhance the total two-way trade between Australia and China already valued at around 110 billion U.S. dollars last year. "The main purposes of the swap agreement are to support trade and investment between Australia and China particularly in local currency terms and to strengthen bilateral trade and cooperation. The agreement reflects the increasing opportunities to settle trade between the two countries to settle trade in Chinese RMB and to make RMB denominated investments." He said.

However, with Australia's federal government blocking Chinese telco Huawei from bidding on contracts for government-run National Broadband Network, the deputy premier said there was concern at the federal government's confused signals. "I was a little surprised by the federal government decision regarding Huawei and particularly the message it sends to our potential investors and contributors to the Australian economy," He told Xinhua.