By Claire Heffron
Australia has blocked the sale of the country’s biggest energy grid, Ausgrid, to two Chinese companies over security concerns.
Australian Treasurer Scott Morrison rejected the bid by the two firms to buy a 50.4% stake in Ausgrid. He explained that selling the network to foreign investors is going against national interest; overseas firms will not take part in the bidding process in the future.
China is Australia’s main trading partner, and this will more than likely strain ties between them. China accuses Canberra of bowing to protectionist sentiment and expressed disappointment in the handling of the deal. Chinese Commerce Ministry spokesman Shen Danyang stated, “this kind of decision is protectionist and influences the willingness of Chinese companies to benefit from Australia.”
The decision should not come as a surprise as Mr Morrison had expressed concerns about the Chinese investment. He said the two companies had to address security fears. Now he says it is these unaddressed apprehensions that have shut the deal down.
“After due consideration of responses from bidders to my preliminary view of 11 August 2016, I have decided that the purchase by foreign investors under the currently planned structure of the lease of 50.4% of Ausgrid, the New South Wales electricity distribution network, would be against [our] national interest.”
But has Australia’s government blocked Chinese bids for strategic reasons, not political ones? China’s state grid corporation already owns assets in Australia. It seems the government had previously given it the green light to bid for Ausgrid.
Morrison has snubbed accusations that his true motive is satisfying powerful lawmakers with xenophobic opinions. Some think the rise of the One Nation party, which is becoming increasingly popular thanks to its strict anti-immigration policies, has influenced the decision.
Importantly, critics say the government will need support to pass new legislation. And this will come from a bloc of foreign investment opponents led by the One Nation party. The refusal of the Ausgrid deal may be a bargaining chip for future political capital.
It is also worth noting that Australians say the decision to sell the power grid was controversial; many believe electricity and water are critical infrastructures that are essential to national security. Security analysts say a Chinese-controlled Ausgrid could become susceptible to cyber attacks. The example they give is the attack by hackers connected to Russia completed in the Ukraine last year, blacking out more than 225,000 people’s power.
At the same time, the UK has delayed a review of the building of a nuclear plant partially subsidised by China. The Hinckley Point plant needed a projected £18 billion ($23.5 billion) investment – Britain’s first new facility in decades.
China’s ambassador to the UK advised that delaying approval of the project brought the two nations to a “crucial historical juncture.” According to Xinhua, the delay in the new plant is groundless, China-phobic and warned that Britain would be foolish to turn down stronger trade ties after Brexit.
New UK prime minister Theresa May said in a recent letter to the Chinese president, Xi Jinping that she looked forward to “strengthening cooperation with China on trade and business and on global issues.” However, Beijing is questioning whether Chinese money is still welcome.
The U.K.-China nuclear deal is particularly in the limelight because the U.S. Government has fined the Chinese company with a major stake in the proposal over nuclear espionage allegations.
An engineer employed by the China General Nuclear Power Company, and the company itself, had illegally collaborated to develop nuclear material in China without US endorsement. The intention of these moves was to, “secure an advantage to the People’s Republic of China,” say reports.
Critics say that Western nations can accept Chinese investments as long as they undertake suitable security reviews and eliminate them from the most sensitive national security sectors. The people of Australia and the UK seem to feel differently.