Official says Australian security key to Chinese investment

CANBERRA, Australia – Australia’s treasurer said Monday that national security would be his overriding consideration when he makes a decision on whether to allow a Chinese consortium to lease a major Sydney electricity grid.

Scott Morrison said he was close to making a decision on whether to allow Chinese state-owned State Grid Corp. and Hong Kong-registered Cheung Kong Infrastructure Group to buy a 99-year lease for half of the New South Wales state-owned electricity network Ausgrid for more than 10 billion Australian dollars ($7.6 billion).

“This is not an easy decision,” Morrison told Sydney Radio 2GB. “National security out ranks everything.”

Chinese foreign investment, particularly from state-owned companies, has become increasingly contentious in Australia as China takes a more aggressive stance in territorial disputes in the South China Sea.

President Barack Obama raised questions with Prime Minister Malcolm Turnbull last year after Australia allowed a Chinese company, Landbridge, to secure a 99-year lease over the strategically important Port of Darwin, which has become a U.S. Marines training hub in northern Australia. Turnbull said Australian defence and security officials determined the AU$506 million deal did not threaten national interests.

Peter Jennings, executive director of the Australian Strategic Policy Institute, a government-established independent think-tank , said neither the Darwin Port lease nor the proposed Austgrid deal were in Australia’s security interests.

Jennings said a Chinese-controlled Austgrid could become vulnerable to being shut down by cyberattack as hackers linked to Russia had done in the Ukraine in December.

Hackers used a co-ordinated attack to take down part of western Ukraine’s power grid, blacking out more than 225,000 people after hitting regional electric power distribution companies. U.S. officials called it the realization of a nightmare scenario — hackers able to take down a critical system on which a country depends.

“You have to be concerned in a future world where we might find ourselves in a much more hostile relationship with China: Could they do us damage domestically by hacking into our electricity grid in Sydney?” Jennings told Australian Broadcasting Corp.

Senator Nick Xenophon, the leader of three senators whose support could be crucial to the government to pass legislation through the upper chamber when Parliament resumes this month, said the foreign investment decision-making process lacked transparency.

“I don’t believe it is in the national interest for a state-owned enterprise to control one of our biggest power assets in this country,” Xenophon told ABC.