China’s drive to become a major player in the global electricity industry has hit its second stumbling block in less than a month, raising questions over its ambitions in other areas of the global market.

Just weeks after a new British government’s decision to delay a decision on building the Hinkley Point nuclear plant – which was to have been part-funded by China – Australia announced it would block a US$7.7 billion deal to lease its biggest electricity grid to China’s state-owned State Grid and Hong Kong-listed Cheung Kong Infrastructure, citing national security.

The developments come as the United States lays espionage charges against China General Nuclear Power, which would be a major shareholder in the British plant.

The two decisions have sounded the alarm bell for Chinese investors regarding sectors deemed to be in the national interests of Western countries as they scramble to play catch-up in the world market.

From an economic point of view, the deals would benefit all parties.

Discouraging Chinese investment will bode well for neither Canberra nor London, given the economic uncertainty ahead, the slowdown in Australia due to the commodities slump and the impact of Brexit on Britain. Both countries will have to weigh their security concerns against their desires to continue attracting Chinese investment. Capital from the world’s richest nation in terms of foreign reserves has become increasingly significant.

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Equally, China sees Australia and Britain as among the best investment destinations. They both boast a mature market, a stable investment environment and strong rule of law.

Like many export-driven East Asian economies, China relied heavily on foreign direct investment in its early industrialisation, as multinationals moved production lines to capitalise on the developing giant’s cheap resources and the world’s largest untapped market.

But outward investment has become an increasingly important tool to drive growth for the world’s second largest economy.

In 2015, China’s outward investment exceeded US$100 billion, the second year that its outbound investment exceeded FDI.

Overseas investment helps Chinese companies upgrade technology, explore markets and promote brands, as they move from copying products from the developed West to buying companies in key industries such as IT, chemicals, pharmaceuticals and engineering.

It is also part of China’s strategy to export its industrial overcapacity and seek better returns on the investments of its foreign reserves.

China General Nuclear Power accused of espionage with its adviser in the US

The British and Australians might be reading too much into claims of a conspiracy to sabotage their energy supplies as the projects, whoever owns them, would be closely regulated. Indeed, China State Grid already has billions of dollars tied up in Australia. It has a stake in distributor AusNet Services and gas and power network Jemena. It is a shareholder in Canberra’s electricity grid. If Australian and British security agencies thought Ausgrid and Hinkley Point were strategic assets then they should have intervened months ago. Their alarming assessments might even be politically motivated, as they come amid recently escalating tension between China and the US-led West.

Commentators in the West have cited Beijing’s defiance of The Hague’s South China Sea ruling, its military assertiveness in the region, and its increasingly authoritarian rule as reasons behind the policy changes.

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They cite such developments as fresh evidence of Beijing’s effort to destabilise the US-led world order.

The decisions also come amid surging trade protectionism and populism in the West, as seen in the US presidential elections and the Brexit vote.

The big question now is whether the Australian and British decisions will influence those of other Western nations. If they do, anti-globalisation forces will threaten the world’s march towards common prosperity.

Cary Huang, a senior writer with the South China Morning Post, has been a senior editor and China affairs columnist since the early 1990s