The report says Australia needs to "create a commercial frameworks that help diversify cooperation between Australian and Chinese partners" if Australia's strategic significance is to be maintained.

Although short of the historic peak of $16.2 billion in 2008, Chinese direct investment inflows into Australia in 2012 increased 21 percent from 2011 to reach $11.4 billion, up from $9.4 billion in 2011 and $3.7 billion in 2010.

"These numbers confirm that Australia is still a priority destination due to our vast supply of high quality natural resources, stable and reliable institutional systems and clean, green and fresh image for lifestyle.

"While mining and resources still dominate investments, we're seeing greater diversification towards LNG, agribusiness, renewable wind energy and real estate," Ferguson told Xinhua.

Hogan predicted that Australia still has a lot to gain from laying further groundwork to attract Chinese investors.

"While Chinese investment in Australia has been small to date accounting for less than 3 percent of Australia's total foreign investment in 2011, it has ranked in the top three sources for proposed investments coming through for approval in the past three years. With the Chinese government now prioritizing outward investment over inward investment for the first time in 2012, China's role in Australia's foreign direct investment will inevitably rise in future." he said.

Australia's cultural anxiety over losing agricultural land to foreign investors was widely misplaced, according to Clayton Utz, countering the view that China was "buying the farm".

"FIRB (Foreign Investment Review Board) has formally intervened in respect of 9 percent of Chinese investments in energy and resources since 2005, and only three were rejected outright."

The onus is now on Australia to tackle the looming issues of productivity and corporate innovation to ensure there are reasons beyond white sands and blue oceans for China to come and play ' Down Under.'