Uncertainty over Australia’s foreign investment rules is not helping trade
A clear list of where foreign investment is welcome and where it is not would put matters back on the right track
Canberra’s veto on national security grounds of a Chinese bid to operate a major power network has generated sparks in Australia as well as between the two sides. Treasurer Scott Morrison, ministerial head of the foreign investment review board, has dismissed as “crap” a claim by former foreign minister Bob Carr that he bowed to the protectionist lobby. Meanwhile, the commerce ministry in Beijing calls it a protectionist move that will deter Chinese investment in Australia.
Australians are confused. The rejected bidders, State Grid of China and Hong Kong tycoon Li Ka-shing’s Cheung Kong Infrastructure, already have extensive investments in Australian electricity networks. The decision against the sale of Ausgrid, power supplier to Sydney, has raised fears of a more protectionist political stance. This follows the appointment of former intelligence chief David Irvine to the FIRB. He has claimed China has weapons in its cyber arsenal to shut down Australia’s power grid. A Xinhua commentary dismissed this as “absurd”.
Morrison said the FIRB had identified critical power and communications issues. As critics point out, however, this is a lease, which can be terminated if conditions such as a stable power supply are breached.
From a Chinese perspective the foreign investment regime has become confusing. But a bipartisan solution may be at hand under the bilateral free-trade agreement. It comes in a report co-authored by economists from the Australian National University and the China Centre for International Economic Exchanges, a think tank. It calls for an investment pact naming sectors that are off limits in order to head off conflict. One of the report’s Australian authors said uncertainty in the foreign investment regime was a key concern of Chinese counterparts. Given that the Chinese think tank in question has close ties to China’s top economic planning agency, the co-authors are confident both governments will seriously consider their recommendations. For the sake of smooth relations it is to be hoped they are right.