The collapse of the Rio Tinto/Chinalco deal spares the Australian government from making its toughest decision to date on China’s efforts to invest in the Australian resources sector.

The proposed deal with the state-owned Chinese aluminium group had become a political hot potato for Canberra over fears that Australia’s top trading partner would also become a major owner of the commodities the country exports. However, Canberra also had to consider the merits of the deal with reference to its increasingly strong trading links with China, a country that has helped underwrite Australia’s economic prosperity.