The multi-billion bid by China’s State Grid for a range of power distribution assets in Victoria – including a 60 per cent shareholding in SPI (Australia) Assets – has exploded as an early test for Tony Abbott on Chinese investment in the run up to the September 14 election. Worth more than $5 billion, the deal would be the single biggest investment in Australia by a Chinese company
In his one visit to China last July since 2007, Abbott set the cat amongst the very sparse Beijing pigeons (birds don’t flourish in the city’s choking smog) when he made it very clear he was not keen on the country’s state owned corporations holding a majority stake in an Australian company.
“It would rarely be in Australia’s national interest to allow a foreign government or its agencies to control an Australian business,” the Opposition leader said.
There are very few agencies of China’s ruling Communist Party that are bigger or more powerful that the State Grid Corporation. It is the world’s biggest power company with revenues of about US$270 billion a year, assets of US$351 billion and employs a mind boggling 1.6 million people.
There was plenty of back peddling by the Opposition after Abbott’s comments which were widely reported in China – but no actual reversal. His problem is the xenophobic wing of the National Party, lead by Barnaby Joyce who rail against Chinese investment and in particular the relative small amounts being made in agriculture where the US, UK, Europeans and South Americans own vastly bigger stakes.
Abbott left most of the heavy lifting, as he has done generally on China, to his Foreign Affairs and Trade spokesperson and Liberal Party deputy Julie Bishop who came to China with a bevy of senior frontbenchers including Nationals leader Warren Truss for the Bo’ao Forum in April. This year’s forum was was also attended by the Prime Minister and a clutch of her Cabinet colleagues.
Ms Bishop explained that the coalition was looking at Foreign Investment Review Board rules and thresholds.
“The Coalition does believe that we need to look at the Foreign Investment Review Board rules, that’s why we had a working party look at particularly investment in agriculture and we have sought submissions and we have been receiving input from a whole range of people about how we can improve Foreign Investment Review Board rules including greater transparency, greater certainty, more uniformity in the thresholds…”
The State Grid bid looks to be the perfect time for Abbott tell the Australian people what changes the coalition plans to make – and whether an Abbott government would pass the State Grid deal which has not been officially valued but has been estimated to be worth north of $5 billion.
Little Red Blog has sought comment from Tony Abbott and Julie Bishop; we will let you know their responses.