Will NSW panda to China? Let's hope so.

Three events in the last couple of months taking place in Sydney, Beijing and Jaworzno (Poland) – two of them this past week - have far more in common that first meets the eye.

First, on 30 July, The Australian's Mark Coultan reported the New South Wales government has called for expressions of interest to privatise the state owned Macquarie Generation's two coal-firedHunter Valley power stations, Liddell and Bayswater. This, Coultan asserted, could be one of the Liberal Premier Barry O'Farrell's biggest asset sales.

Included in the sale are two development sites, one adjacent to the

Bayswater facility with planning approval for another generator.O'Farrell is penciling in more than $2 billion for the sale of MacGen which produced an after tax profit of $120 million in the 2011/12 financial year.Bayswater, it should be noted is the largest power station in Australia.

While MacGen provides energy to folk from South Australia all the way to northern Queensland, its dominance can be measured best by understanding that its output could satisfy 40% of the demand of NSW households.

Second, a few days earlier, on 25 July, the ChinaDailyreported that the People's Republic of China and Australia vowed to hasten negotiations on a bilateral free trade agreement following a meeting in Beijing between the PRC's Vice Premier Wang Yang and Australian Trade Minister Richard Marles.

And third, on 11 June Reutersreported that China's Dongfang Electric Corp won the right to build a generation plant in northern Bosnia after European firms showed little interest. Understandable given the continentals have a little matter called the Euro-crisis to deal with.

Even though the Bosnian plant will not be profitable for some time, Dongfang's strategy was to secure a toehold in Europe. Donfang's low construction costs and easy access to capital clinched the deal.

Bosnia, like NSW, was a particularly popular choice as it is an economy that can export electricity to neighbouring states, thereby not being reliant on just one economy for its financial success. Easy access to raw materials was also a factor. In Bosnia abundant hydropower was available and in NSW, plentiful coal.

In addition to mere financial stakes in companies, the Chinese are also involved in energy related construction projects. Know-how and a keen price is what convinced Polish boiler maker Rafako, to recruit China National Electric Engineering to its consortium to build a 900 MW coal-fired power unit for Polish utility Tauron at its Jaworzno site, in southern Poland.

Summing up China's move into south-east Europe, Zeljko Lovrincevic, analyst at Croatia's Institute of Economics explained "the region is getting more interesting for the Chinese because of less strict public procurement procedures". But more significantly, "Chinese firms... are not strictly profit-driven. They look at a project as an opportunity to expand business presence and engage part of their own workforce".

A proposed sale of a major Australian State Owned Corporation to Chinese State Owned Corporation could raise eyebrows amongst the intelligentsia and will no doubt elicit howls from the pack of isolationists, protectionists and their foghorns on Capital Hill. But that should not impede NSW from searching for the best deal for the NSW taxpayer.

O'Farrell should expect interest from one or more of the PRC's five largest power companies, all State Owned Enterprises, including:

• China Datang Corporation and its subsidiary, Datang International Power Generation Company

• China Guodian Corporation("Guodian") and its subsidiary, GD Power Development Company(owns generation assets in Myanmar and plans on building a hydro plant in Cambodia)l

• China Huadian Group and its subsidiary, Huadian Power International

• China Huaneng Group and its subsidiary, Huaneng Power International(owner of generation assets in Singapore , the United Kingdom, the Netherlands, Mexico, the Philippines and who'd have thought? On Queensland's Darling Downs);

• China Power Investment Corporation and its subsidiary, China Power International Development

The Koreans and the Japanese will no doubt also express interest. And we should welcome that. As may the sovereign wealth funds of the United Arab Emirates, Norway and Singapore.

But there should be no misunderstanding as to the first duty of the NSW government. It is to look after the economic interests its citizens. Pure and simple.

There are several ways to accomplish this, but key amongst these is to maximize the proceeds of any sale of what can be established to be a non core asset while simultaneously not losing sight of the fundamental principle that a high price should at times be sacrificed at the alter of Consolidated Revenue in order to increase, or at least not decrease, competition in the market under consideration.

Dim sum Mr. Premier?