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Jousting with China over investment

Last updated on 26 November 2015

Australia’s leaders seem confused on what and what is not a strategic asset.

The question arises after the Chinese – encouraged by Australia’s invitation to invest in  assets from communications networks to farm land – have been pouring billions of dollars into Australia.

One of the latest investments to raise eyebrows is the grant of a $506 million 99-year lease of the northern port of Darwin to Landbridge, a Chinese company. Another is the New South Wales government proposal to sell the poles and wires of its electricity distribution grid to a Beijing state-owned company.

In the case of Darwin, President Barack Obama uttered a polite rebuke to prime minister Malcolm Turnbull at a brief meeting in Manila last week, saying that he would have liked to have had a ‘heads-up’ of the deal. Darwin is the closest Australian port to the South China Sea, often hosts US warships, and is a centre for training US marines on a rotating basis.

The government’s intelligence agencies have voiced their opposition to the proposed sale to China of the NSW electricity distribution system.

Are these fears paranoia or, of more concern, a latter-day re-emergence of the ‘Reds under the bed’ phobia that characterised Australia during the sixties and seventies?  Or perhaps it is the growing realisation that China is the most cash-rich country in the world and sees Australia as a profitable and pleasant place to do business in its own region?

Whatever the answer, no one should be surprised. The Chinese have loomed large on the international financial stage for years.  Arab or Russian ownership of foootball clubs or racehorses may attract more media attention, but China’s global development and investment strategy has been well charted by policymakers.

It does not look as if the Turnbull government has any appetite to block the Darwin deal and despite intelligence officers saying, off-the record of course, that sale of the NSW grid to China is not going to happen.As it happens, they were right.  The bookies’ favourite, a consortium led by Sydney-based Macquarie Bank and the state Grid Corporation of China, which already had extensive energy infrastructure assets in Australia, missed out. Their tender was trumped by a consortium of Canadian, Abu Dhabi, Kuwait and Australasian interests, who paid 410.25 million.

Strategic asset issues apart, the Turnbull government is showing more sensitivity to the sale of agricultural assets, following the trend in New Zealand. Treasurer Scott Morrison has rejected bids by overseas companies for the country’s largest cattle station, Anna Creek, close to the former rocket testing range at Woomera in South Australia.

More remarkably, the Turnbull government has struck a deal with the Greens to tighten controls on the sale of agricultural land and agribusinesses to foreigners.

Under new legislation likely to be passed this week, the Foreign Investment Review Board (FIRB) will review all sales of farmland to foreign buyers, once a buyer’s portfolio reaches $A 15 million. It will scrutinise all agribusiness sales above $53 million. Under the deal, the Greens have achieved their long-standing goal of a national register of foreign-owned water resources.