China Communications Construction Company (CCCC), a state-owned enterprise, is believed to be the sole remaining suitor for John Holland after bids from other companies were rejected as being too low.

The signing of a free-trade deal between China and Australia has made a purchase of an Australian construction company more attractive for the Chinese group, because the agreement allows for Chinese workers to be brought into Australia to build projects.

However, CCCC's ban from World Bank projects until January 2017 could raise red flags with state governments awarding infrastructure projects if the Chinese company was to acquire John Holland.

In July 2011, CCCC was prohibited from working on World Bank road and bridge projects because it was a successor to another Chinese firm, the China Road and Bridge Corporation (CRBC) that was banned in January 2009. CRBC became a wholly-owned subsidiary of CCCC following a corporate restructuring in 2005.

CRBC was one of six Chinese firms the World Bank barred for allegedly colluding in bidding for road projects in the Philippines. None of the firms received any funds from the World Bank following the investigation.

The construction industry is regularly ranked among the world's worst industries for corruption, and John Holland's parent, Leighton Holdings, remains under investigation by the Australian Securities and Exchange Commission over alleged bribes in Iraq.

Amar Flora, chief operating officer for the University of Sydney's John Grill centre on project management, said Australian governments will need to carefully review Chinese investments in Australian construction and infrastructure to ensure there is no link to corruption.

"Is the Australian government willing and capable of providing quality assurance on Chinese investment, and in ensuring that the Chinese investment complies with Australian regulatory frameworks?" Mr Flora said.

Australian rules on bribery are not as tough as in other countries, such as the UK, where failure to prevent bribery is a criminal offence.

However, Mr Flora also said Australian infrastructure would benefit from the new free trade agreement because China had a good track record on building projects quickly and within budget, albeit with cheaper labour.

"It could add some competitive tension in the construction and infrastructure labour market as supply from China can potentially increase, driving down wages in Australia," Mr Flora said.

Gregory Hodkinson, the global chairman of engineering and design group Arup, forecast earlier this year that the current wave of Spanish investment in Australian infrastructure would be followed by a Chinese wave as Chinese companies move abroad.