Yesterday's abandonment by Chinese coal major Yanzhou of its full takeover of its Australian associate, Yancoal Australia, has left a hole in Australia's credibility on foreign investment regulation.

Yancoal Australia is the old Gloucester Mining but is more accurately seen as the local vehicle for Yanzhou. In 2009, Yanzhou was allowed by the Labor government to acquire Felix Resources, on the basis that it be listed and headquartered locally via Yancoal and sell down its stake in Yancoal to below 70%. In 2012, then-treasurer Wayne Swan gave Yanzhou an extra year to sell down its stake when it picked up Gloucester.