Australia Reviewing Asset Sales After Obama Discusses China Buy

  • President raised Darwin port sale in APEC talks with Turnbull
  • Northern Territory approved port selloff to China's Landbridge

Australia is reviewing rules for selling state-owned infrastructure to foreigners after the Obama administration raised concerns that Chinese investors had bought a port in the northern city of Darwin where U.S. Marines are based.

The government is consulting with states and territories on future asset sales, after the Northern Territory last month approved leasing the Port of Darwin to China’s privately-owned Landbridge Group, Treasurer Scott Morrison said Thursday. President Barack Obama and Prime Minister Malcolm Turnbull discussed the issue when they met on the fringes of the Asia-Pacific Economic Cooperation forum in Manila this week.

“There are constitutional issues around the sovereignty around particular critical infrastructure assets, which are held by states and territories, so it’s not something the Commonwealth government can simply move on unilaterally,” Morrison told reporters in Sydney on Thursday.

The issue highlights Australia’s delicate balancing act in maintaining close relations with the U.S., its main military ally, and China, its biggest trading partner. The nation is seeking to tap overseas as its states seek to recycle government-owned assets to unlock growth.

In an interview a week after coming to power in September, Turnbull said China’s expansionist policies in the South China Sea were causing tensions and were counter-productive.

He told reporters Thursday that sale of the port in Darwin, where as many as 2,500 Marines will be based, was approved by Australian regulators because the port was commercial and wasn’t involved in defense.

“The fact that the Darwin port was being privatized was not a secret,” he said. “It was announced publicly last year, it was well known. The fact that Chinese investors were interested in investing in infrastructure in Australia is also hardly a secret.”

Landbridge, which operates a 30 million metric ton per annum port in North Haizhou Bay in Shandong province, is paying A$506 million ($362 million) for the 99-year-lease to operate the Port of Darwin, with the Northern Territory government planning to use the proceeds to invest in new infrastructure.

Competition for Australian infrastructure assets like ports and power grids has intensified in recent years, with buyers drawn by the nation’s almost quarter-century of economic growth. New South Wales state has sold ports including Botany, Kembla and Newcastle and is planning to sell power transmission company TransGrid by the end of the year.

Australia’s defense agencies would work closely with their American counterparts to ensure concerns over issues such as selling infrastructure assets to foreign investors were dealt with appropriately, Northern Australia Minister Josh Frydenberg said in an Australian Broadcasting Corp. interview today.

The issue over Darwin’s port comes as Australia on Thursday blocked the sale of the nation’s largest private landowner to an overseas buyer. The government said the proposed transaction was “contrary to Australia’s national interest” because part of the property sits within a satellite launching and weapons-testing area.

S. Kidman & Co.’s properties were listed for sale in April, with local media reporting that China’s Shanghai Pengxin Group was in exclusive talks to buy the string of ranches for about A$350 million ($250 million).

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