Every friendship has its testing moments, and this is one such time for Australia and China. There has been what could best be described as a frenzied reaction in Australia over the past few weeks as Chinese resource companies look to swallow up large chunks of the Australian mining industry, among them iconic names such as iron ore and base metals producer Rio Tinto. The Australian government, which prides itself on its strong links with China because of Prime Minister Kevin Rudd 's familiarity with Chinese language and politics, has been given the mother of all tests, because it has the power to block or approve Chinalco's proposed A$30 billion (HK$150 billion) investment in cash-strapped Anglo-Australian Rio. Foreign investment is a way of life in Australia; it has been since the 19th century, when the British owned vast tracts of farmland. As one commentator put it this week, Australia has been dancing with foreign partners for many years. But dancing with the Chinese raises a range of issues. China's political system is not democratic and so much of its business is either state owned, or controlled and influenced in large measure. And China is a major consumer of the products produced by Rio. On the other hand, beggars, as they say, can't be choosers. In the case of Rio, there is little blue sky ahead without a major injection of investment. All in all, China's large and looming presence presents a policy and political conundrum for Mr Rudd and his Treasurer Wayne Swan, who is the minister responsible for saying 'yes' or 'no'. And while both are playing their cards close to their chest - merely noting that all foreign takeovers are assessed in light of the national interest and that the Rio deal is no different - they have to weigh up what saying 'no' would mean for Australia's relationship with China. The domestic politics of the Chinalco-Rio deal are finely balanced in Australia. Rio says more than 5,000 jobs would be lost if the government vetoes the deal, and that future investment plans worth billions of dollars would vanish. This is bad news for Mr Rudd as the economy slides into recession. On the other hand, there are signs that a rather potent opposition campaign based on xenophobia and economic nationalism could take hold among voters. Peter Costello, who was Australia's Treasurer for 11 years during the time of prime minister John Howard, sneered recently that the Putonghua-speaking Mr Rudd will no doubt approve the deal, making Australia a branch office of China. Bob Brown, who leads the Greens, a minor party, is outraged that Australia would allow its resources to be controlled by a country like China, which has an appalling human rights record. Chinalco and Rio have thrown either a grenade or a forest of flowers at the Sino-Australian relationship. Only Mr Rudd and Mr Swan can determine whether there will be an explosion or an outbreak of love. Greg Barns is a political commentator in Australia and a former Australian government adviser