Chinese Investment and Australia’s National Security

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Chinese Investment and Australia’s National Security

Australia is always excited by the prospect of Chinese wealth, but with certain important caveats.

Chinese Investment and Australia’s National Security
Credit: Australia cattle station via Shutterstock.com

There were three national security announcements in Australia regarding China last week. Espionage? The South China Sea? In fact, no, even if they may be tangential concerns. Instead two Chinese bidders were refused the nation’s largest cattle station in Western Australia and TransGrid electrical supplier in New South Wales, on national security concerns. Chinese company Landbridge, however, was granted a 99-year lease at the Darwin port. Security experts were divided, even within the ranks of the Australian Strategic Policy Institute, and politicians like Clive Palmer predictably horrified. Palmer, you may remember, called the Chinese “mongrels” last year.

We have covered security concerns over the point and as Greg Austin has said, military can take control back in times of need. There have been intelligence gathering concerns, but experts also think much of what China could find by leasing the port they could discover in other, and presumably cheaper, ways. Professor Hugh White agrees. He told The Diplomat, “operating the port would give China few chances to collect intelligence that they could not collect in other ways.”

He said the same about the Kidman cattle station sale, which was nixed thanks to its proximity to the Woomera Protected Area which tests munitions. “This concern seems overstated. It is far from clear that operating the station gives China any intelligence collection opportunities that could not be pursued in other ways.”

Kidman is the largest by-land cattle station in Australia and makes up over two and a half percent of total agricultural land or, as Forbes put it, something the size of Kentucky. Of course odd things and security threats have occurred before in so much empty space out in Western Australia, but it is unlikely that the would-be Chinese purchaser of the 120-year-old station was planning on testing bombs. Selling so much land to foreigners is also quite emotive for Australians as Stephen Grenville at Lowy noted, even though as a nation they have so much of it. Selling too much real estate to Chinese investors has triggered worries, from driving up prices to the provenance of that cash, but companies and cattle stations are a little different, which we’ve also noted before.

The Australian Broadcasting Corporation reported last week: It’s been reported that a bidding war above $350 million has been playing out between China’s Genius Link Group and fellow Chinese company Shanghai Pengxin for the vast cattle enterprise. But the Treasurer said the size and location of the properties means selling them to a foreign buyer would be “contrary to the national interest,” and the deal cannot go ahead.

Senator Richard Leyonhjelm says the cattle business would not exist without foreign investment and rebuffing the Chinese is essentially xenophobic. It is true that Chinese companies and China have felt unfairly treated by Australia and believe they are held to higher strictures than other nations even as China is Australia’s largest investor and biggest two-way trade partner.

Now new rules have been announced that all purchases of farmland over A$15 million by China, and other Asian nations, must be approved by the Treasury. This is down from A$252 million. Trade sanctions have already been threatened by China, at a time when both parties should be cheering the ChAFTA.

The government has cheered the ChAFTA. Malcolm Turnbull believes it may be the most significant trade deal Australia has signed. Tony Abbott was helplessly waving it as evidence of his efficacy as prime minister even as he was strong-armed out the door of the PM’s office, yet Australia sees China as a great market for its goods while remaining suspicious of China’s investment in Australia. They should be buying the steak, not the farm that produces it, goes the received wisdom.

The Australia-China Business Council has before elucidated these feelings, notably in a 2012 report, but a recent blog post actually did not attack the Treasurer’s recent decision, but instead saw it as a way forward and noted that former Treasurer Joe Hockey had earlier nixed a sale to American interests. “If anything, the scuppered American bid for GrainCorp suggests the Australian Government is not anti-Chinese. It’s just against foreign investment in sensitive agribusiness interests. That’s not personal; it’s just politics.”