China says blocked electricity grid deal will deter Chinese firms from investing in Australia

China’s embassy in Australia has warned that the government’s rejection of bids by two Chinese companies in the A$10 billion (HK$59.7 billion)sale of its biggest energy grid showed “clear protectionist tendencies” and would have a “serious impact on the enthusiasm” of Chinese investors.

“The Chinese government is highly concerned about the statement by the Australian Treasurer on his preliminary decision to block the sale … on national security grounds,” the embassy said in a statement to The Australian newspaper.

National security risk? Australia bans multibillion-dollar Chinese investment in power grid

Treasurer Scott Morrison announced last week that neither State Grid Corp of China nor Hong Kong’s Cheung Kong Infrastructure Holdings, the preferred bidders, would be allowed to seal a deal.

Morrison declined to provide further detail on the government’s objections beyond citing national security concerns.

The Chinese embassy noted that the decision was the second time this year the government has rejected bids for Australian assets by Chinese interests, referring to a bid by a China-led consortium to buy cattle company Kidman Co.

Morrison rejected the A$371 million offer from a group headed by Hunan Dakang as also not in the national interest despite the bid with partners Shanghai CRED Real Estate Stock Co and local company Australian Rural Capital being revised after a preliminary rejection.

Australia’s decision to reject the Ausgrid deal underscores the country’s changing political climate since a handful of protectionist senators took power in elections last month. The decision also sets new parameters to the relationship between Australia and its biggest export partner just eight months after a A$100 billion free trade agreement took effect.

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“The Australian side stated on many occasions that it welcomes Chinese business investment, but made decisions just to the contrary,” the embassy said in its statement. “The Chinese side hopes that the Australian government will make efforts to create a fairer, better and more transparent trade and investment environment for Chinese enterprises.”

It added the handling of both the Ausgrid and Kidman deals “would have serious impact on the enthusiasm of Chinese firms which want to come and invest in Australia”.

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