Business
China warns 'protectionist'
Australia on investment after grid deal blocked
Australia's decision to block the A$10
billion ($7.7 billion) sale of the country's biggest energy grid to Chinese
bidders was a protectionist move that would negatively affect investment in the
country, China's Ministry of Commerce said on Wednesday.
Australian Treasurer Scott
Morrison said last week that preferred bidders State Grid Corp of China
[STGRD.UL] and Hong Kong's Cheung Kong Infrastructure Holdings (1038.HK) would be prevented from buying
electricity network company Ausgrid, citing unspecified national security
concerns.
"This kind of decision is
protectionist and seriously impacts the willingness of Chinese companies to
invest in Australia," China Commerce Ministry spokesman Shen Danyang said
at a regular news briefing in Beijing.
"China hopes Australia will create
a fairer and more transparent environment for Chinese investment."
The decision was the second time this
year Canberra has rejected bids for major Australian assets by Chinese
interests, the biggest source of proposed foreign investment in Australia,
according to an April report from the Foreign Investment Review Board.
It previously knocked back an offer by a
China-led consortium to buy the country's largest agricultural land owner,
cattle company Kidman & Co.
UNDER SCRUTINY
China's offshore ambitions have come
under increasing scrutiny this year by governments in Europe and the United
States.
Following a surprise move by new British Prime Minister
Theresa May to review the building of a nuclear plant part funded by China,
Beijing questioned whether Chinese money was still welcome.
Australian Prime Minister Malcolm Turnbull used a major
speech on Wednesday to criticize the rising tide of protectionism within parliament,
despite his government being responsible for the rejection of the Ausgrid and
Kidman bids.
The speech warned against giving in to the growing
protectionist mood reflected in the new parliament, which he said could reverse
gains made by the country since it liberalized its economy two decades ago.
Turnbull's conservative Liberal-National coalition will at
times require support in the new parliament from a bloc of foreign investment
critics led by the Far-right One Nation party to pass legislation.
FOREIGN
INVESTMENT
Proceeds from the sale of state-owned assets are designed to
be plowed back into the economy through job-creating infrastructure projects,
including public transport networks.
"These are the transactions Australia needs if it is
going to get out of the low growth, low productivity scenarios," said
Brendan Lyon, chief executive of industry lobby group Infrastructure
Partnerships Australia.
Chinese investment in Australia
surpassed $11 billion in 2015, according to a report by accounting firm KPMG
and the University of Sydney.
Former senior defense department official Peter Jennings said
the trade relationship put Australia in a difficult strategic position.
"We've never had a greater dependency with any
country," said Jennings, a director at the Australian Strategic Policy
Institute.
"The risk that creates for us is if Beijing wants to
adopt politically coercive policies, it's in a fairly strong position to do so
with us because of that level of trade dependence."
Last year, Landbridge Group, owned by Chinese billionaire Ye
Cheng, won a long-term lease to operate Darwin's port, in the north of
Australia, in a deal worth A$506 million.
Turnbull defended the deal following reports that U.S.
President Barack Obama had expressed anger at the Australian Prime Minister for
not having informed him earlier.
U.S. Ambassador to Australia John Berry told Reuters national
security must be taken into account when considering foreign direct investment
in infrastructure and sensitive areas.
"The U.S. fully respects the process and decisions on
foreign investment made by the Australian government, even when it affects U.S.
companies," Berry said in a statement.
(Additional reporting by Matt Siegel and Tom
Westbrook in SYDNEY and Michael Martina in BEIJING; Editing by Lincoln Feast)
Source by Reuters
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