THE Chinese embassy has warned that Australia’s rejection of bids by two Chinese companies in the A$10 billion (US$7.7 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.

    Australian Treasurer Scott Morrison announced last week that he had 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 Australian Government’s objections beyond citing national security concerns.

    The Chinese embassy noted that the decision was the second time this year the Australian 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 Ltd. being revised after a preliminary rejection.

    Australia’s decision to reject the Ausgrid 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 China, its biggest export partner, just eight months after a A$100 billion free trade agreement took effect.

    “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.”

    Despite overseas capital being vital to Australia’s future expansion, the Australian Government is arguably making it harder for foreigners to invest. Last year, it tightened scrutiny of sales of farmland to Chinese, Japanese and Korean buyers.

    When the Obama administration last year raised concerns that a Chinese company had bought a port in the northern city of Darwin, where U.S. Marines are based, Morrison beefed up oversight of the sale of state assets.

    The prospects for Chinese suitors haven’t improved since the July 2 election in Australia saw a swag of protectionist independent or minor party lawmakers elected to the upper house Senate.

    The National Party, the junior partner in Prime Minister Malcolm Turnbull’s coalition which has been a vocal critic of investment by Chinese State-owned companies, also now has a bigger voice in the government.

    Australia isn’t alone in pondering national security when it comes to foreign investment in critical infrastructure. U.K. Prime Minister Theresa May has postponed approval for a new nuclear reactor in which China General Nuclear Power Corp. would have a minority stake. (SD-Agencies)