Blocking Chinese gas takeover won’t damage Australia’s foreign investment pipeline



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A single foreign company having sole ownership and control over Australia’s most significant gas transmission business, says Australia’s treasurer, is not in the national interest.
Shutterstock

Simon Segal, Macquarie University

The Morrison government’s decision to block Hong Kong’s largest infrastructure company from buying one of Australia’s key infrastructure companies seems to make a complicated relationship with China even more fraught.

Rejections of foreign takeover bids are extremely rare. This is just the sixth such decision in nearly two decades.

It might be argued the blocking of the A$13 billion bid for gas pipeline operator APA Group by Cheung Kong Infrastructure (CKI) Holdings reflects increasing politicisation of Australia’s process for reviewing foreign investment.

But this is not a political shot across the bows like China’s announced anti-dumping probe into imports of Australian barley. This takeover proposal was always doubtful. News of its knock-back potentially damaging relations with China, or foreign investment more generally, are greatly exaggerated.




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As tensions ratchet up between China and the US, Australia risks being caught in the crossfire


Always unlikely

APA Group owns 15,000 km of natural gas pipelines and supplies about half the gas used in Australia. It owns or has interests in gas storage facilities, gas-fired power stations, and wind and solar renewable energy generators.


APA Group’s infrastructure assets.
APA

Back in September, after APA accepted the takeover offer from a CKI-led consortium, the investment research company Morningstar judged it unlikely that Australia’s Foreign Investment Review Board would approve the bid.

The board is only an advisory body. The final decision rests with the federal treasurer. Josh Frydenberg signalled his intention to block the deal in early November, giving CKI a few weeks to change its proposal, either by selling assets or finding other investment partners, enough to change his mind.

That did not happen. Frydenberg’s final decision to block the bid was based, he said, on “a single foreign company group having sole ownership and control over Australia’s most significant gas transmission business”.

He emphasised the government remained committed to welcoming foreign investment: “foreign investment helps support jobs and rising living standards.”

It’s not all about CKI

CKI is not state-controlled. It is headed by the son of Hong Kong’s richest man, Li Ka-shing, and has a history of considerable success in investing in Australia.

Nonetheless speculation about the rejection damaging the Australia-China relationship has ensued. In the words of the South China Morning Post: “As the most China-dependent developed economy, Australia potentially has a lot to lose should relations with its biggest trading partner deteriorate further.”




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Let’s put this into perspective.

First, there is broad bipartisan agreement that foreign investment is crucial to Australia’s economic prosperity.

Second, as already mentioned, this is just the sixth major public foreign investment proposal blocked since 2000. (All but one, notably, have been by Liberal treasurers.)

Third, all six rejections have been case-specific. Each bid has been considered on its merits.

This case arguably has less to with CKI being Chinese linked than with the size and significance of APA, whose transmission system includes three-quarters of the pipes in NSW and Victoria.

In 2016 CKI’s A$11 billion bid for NSW electricity distributor Ausgrid was also blocked (by then-treasurer Scott Morrison) on national security grounds.

But in 2017 CKI won approval for its A$7.4 billion bid for West Australian-focused electricity and gas distribution giant DUET. And in 2014 CKI’s acquisition of gas distributor Envestra (now Australian Gas Networks) was also cleared.

Shifting emphasis

This is not to deny that politics played a part in Frydenberg’s decision.

The seven-person FIRB board was divided (the exact votes are not known). The Treasurer’s call could have gone either way.

Forces within the Liberal Party that opposed Malcolm Turnbull’s leadership have also been deeply hostile to APA’s sale to CKI. Among the most vociferous was NSW senator Jim Molan, who warned of “hidden dragons” in the deal.

For a minority government lagging in the polls and just months away from an election, such views have assumed inflated importance.

Nonetheless the APA decision was not a surprise. Greater scrutiny is now part and parcel of the Foreign Investment Review Board process. In particular, the emphasis has firmly shifted over the past few years to scrutinising national security and taxation areas.




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The Critical Infrastructure Centre within the Department of Home Affairs, which became fully operational this year, brings together capability from across the federal government to manage national security risks from foreign involvement in Australia’s critical infrastructure. It’s particularly focused on telecommunications, electricity, gas, water and ports.

David Irvine, who has chaired the Foreign Investment Review Board since April 2017, is a former head of the Australian Security Intelligence Organisation.

This shifting emphasis does not equate to a bias against foreign investment per se. There is no evidence investors, including Chinese, are being discouraged or significantly deterred from investing in Australia.

CKI itself demonstrates, by returning to Australia despite previous rejections, that foreign investors will not give up so long as the next deal stacks up. There is already speculation CKI has moved on, and now has its eyes on Spark Infrastructure, an ASX-listed owner of energy asset.The Conversation

Simon Segal, PhD research candidate, Business, Macquarie University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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China: Persecution News Update


The links below are to articles reporting on persecution news from China (the most recent are at the top).

For more visit:
http://www.gospelherald.com/articles/71450/20171004/china-detains-two-christian-women-3-y-o-missionary-work.htm
http://www.scmp.com/news/hong-kong/law-crime/article/2113277/former-hong-kong-eoc-official-loses-gratuity-fee-retrial
http://www.persecution.org/2017/09/27/china-losing-freedom-in-every-aspect/
http://www.christiantimes.com/article/china-intensifies-crackdown-on-churches-with-new-plans-to-force-registration-with-government/72905.htm
https://international.la-croix.com/news/cross-accidentally-set-alight-as-chinese-officials-take-it-from-church/5963
https://www.ucanews.com/news/chinese-priest-gets-jail-time-for-theft-supporters-say-he-was-framed/80303
http://www.chinaaid.org/2017/09/christian-academy-banned-for.html

Two systems, one headache: Hong Kong twenty years after the handover to China



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The CCP seems intent on bringing Hong Kong into line.
Shutterstock

Nick Bisley, La Trobe University

Hong Kong had suffered “more than a century of vicissitudes”. So declared Jiang Zemin on July 1, 1997, at the return of the colony to “the motherland”. Twenty years on from the handover of the British Crown colony, the people of Hong Kong are increasingly experiencing the vicissitudes of communism.

Claimed as a spoil of the first Opium War in 1842, Hong Kong was the last significant colonial outpost relinquished by the British. Zimbabwe had gone in 1980, and in 1984 Margaret Thatcher, of all leaders, agreed to terms with Deng Xiaoping for the handover of the territory to the People’s Republic 13 years later.

A fundamental tenet of the 1984 settlement was that until 2047, Hong Kong would enjoy continuity of the legal, economic and administrative arrangements established by the British. In the words of the Hong Kong Basic Law:

The socialist system and policies shall not be practised in the Hong Kong Special Administrative Region, and the previous capitalist system and way of life shall remain unchanged for 50 years.

While it had not been an electoral democracy, people who lived in the colony had freedom of association, expression and the rule of law administered by an independent judiciary. This was key to its appeal to those, whether expats or refugees seeking an outpost of liberalism in a largely illiberal Cold War Asia. But it was also fundamental to the economic dynamism of the trade and finance hub.

The confidence that multinational firms, banks and entrepreneurs had in the commercial rule of law, from contracts to intellectual property rights, made the city a remarkable economic success story.

Deng’s China had agreed that even though the party-state’s flag would fly over The Peak these freedoms would continue. Indeed, in 1984, less than a decade into the “reform and opening up” program, and in the very first days of the special economic zone initiative, these guarantees were seen as a vital part of the broader program revitalising China’s economy. Hong Kong promised to be one of the most important engines for economic growth; it made no sense to undermine the foundations of that success.

One China, Two Systems was the slogan in 1997, but it also signalled something more. The PRC was moving away from its command economy past and toward a more market oriented future. And at the time, one of unalloyed liberal optimism, some thought that the Hong Kong settlement might be an experiment in political pluralism. Hong Kong could be a model first for Taiwan and then possibly also for a more open Chinese system.

Two decades after the handover and the party-state is uneasy about that the implications of the exceptionalism of “one country, two systems”. Rather than embracing the pluralism that was inherent in the agreement with the UK, the Chinese Communist Party seems intent on bringing Hong Kong into line. But it is discovering that this may be a more difficult task than it realised.

Beijing seems to have fallen for the tired cliché that Hong Kong people are more interested in money and shopping than they are in political issues. As China scholar Graeme Smith recently said on the excellent Little Red Podcast, Hong Kong is not Singapore. It has long had a politically engaged populace.

In 1967, more than 50 people died in riots prompted by discontent with British rule.

In 1970 frustration with public transport boiled over. The CCP should not have been surprised when in 2003, it attempted to bring the Basic Law – the quasi constitutional arrangement established in 1997 – in line with the mainland’s authoritarian sedition and public security arrangements, the people of Hong Kong protested in huge numbers.

Popular protest against public transport changes occurred in 2007 and in 2014 the “umbrella revolution” showed the depth of pro-democracy sentiment in the SAR, especially among the young. Now, there is what has come to be known as the “locallist” movement, which seeks to retain Hong Kong’s distinctive features. It aims to frustrate Beijing’s desire to turn July 1, the felicitously named Special Administrative Region Establishment Day, into a celebration of national glory.

Hong Kong has always been exceptional. From its architecture to its accents, the people’s attitude to their appetites, Hong Kong is unlike anywhere else. Given this, it is understandable that the party state would want to turn the city into a model communist enclave. The problem is that that which makes Hong Kong vibrant, cosmopolitan and globally engaged sits very uneasily with CCP dictates.

As the party state embarks on the difficult journey moving from a middle to a high income country, it should reflect on the problems it faces in Hong Kong. A people who have enjoyed 150 years of freedom do not enjoy those ideas being shackled.

And it is those very ideas that are needed for the PRC to make good on its ambition to become a genuinely prosperous country. At some point the CCP has to make its peace with the freedom of ideas and a plurality of voices. Hong Kong should be the place where it figures out how to do this.

The ConversationInstead, 20 years on from the handover, rather than being a pathfinder for pluralism, Hong Kong looks like it will become another Xinjiang; a troublesome region that needs to be brought to heel. This clamping down on the freedoms agreed to in 1984 is hardly the sign of a strong and confident country looking to project leadership on the global stage.

Nick Bisley, Executive Director of La Trobe Asia and Professor of International Relations, La Trobe University

This article was originally published on The Conversation. Read the original article.

AUSTRALIA: ENVIRONMENTAL DISASTER UNFOLDING ON QUEENSLAND COAST


An environmental disaster is unfolding on the Queensland coast, with the oil spill from the Hong Kong-flagged ship Pacific Adventurer. The Pacific Adventurer was badly damaged during the Cyclone Hamish weather event last week.

The Pacific Adventurer somehow managed to get caught up in the cyclone despite very early warnings concerning the cyclone. Some 31 containers containing ammonium nitrate were washed into the sea during the cyclone and as this occurred the ship itself was badly damaged, leaking some 230 tonnes of oil into the ocean. The initial report from the ship was that some 30 tonnes of oil had been lost.

The environmental disaster is huge, with the oil now affecting over 60km of coastline, including the eastern coast of Moreton Island. Sea life is being severely impacted by the disaster.

The cleanup is being done at a rate of about 1 to 2 km a day, which means it will take quite some time to complete.

Also of concern are the 31 containers of ammonium nitrate that are still missing and which could further contaminate the region. Navy mine hunters are being called in to search for the containers which remain a shipping hazard.

CHINA: CHRISTIANS WARY AS RECESSION, UNREST HIT


Beleaguered government officials could view church as threat – or a force for stability.

BEIJING, February 25 (Compass Direct News) – With China’s central government last December issuing a number of secret documents calling on provincial officials to strive to prevent massive unrest in a rapidly collapsing economy, observers are watching for signs of whether authorities will view Christian groups as a threat or a stabilizing influence.

While the Sichuan earthquake last May proved that Christians were willing and able to assist in times of national crisis, raids on house church groups have continued in recent weeks.

The secret reports have come in quick succession. A central government body, the Committee for Social Stability (CSS), issued an internal report on Jan. 2 listing a total of 127,467 serious protests or other incidents across China in 2008, many involving attacks on government buildings or clashes with police and militia.

“Recently every kind of contradiction in society has reached the level of white heat,” the CSS warned in an earlier document issued on Dec. 16.

The document said some officials had “ignored the welfare of the masses … piling up pressure until the situation exploded,” and concluded that, “The relevant Party and State organs must … give daily priority to the task of getting rid of all the maladies which produce social instability and the present crisis.”

On Dec. 10, the Central Committee of the Chinese Communist Party and the National People’s Congress issued an internal document calling on senior provincial officials to make every effort to alleviate social and political problems exacerbated by the current recession.

On Dec. 12, the Ministry of Public Security authorized provincial officials to tighten control of all communications in the sensitive period prior to Chinese New Year, which this year fell on Jan. 25. Fearing turmoil as millions of newly-unemployed factory workers headed home for New Year celebrations, the government cancelled all leave for Public Security Bureau (PSB) officers, placed them on high alert and mobilized an additional 150,000 police and armed militia for the holiday period.

On Dec. 15, the public security ministry issued a further document calling for tightened security at government ministries, military bases, armament stores, state borders, airports and railway stations.

In its Dec. 16 report, the CSS warned that provincial authorities must try to resolve grievances by non-violent means before protestors begin attacking factories and government offices or stealing, looting and burning property.

The scale of demonstrations and riots has already reached frightening proportions. In the Jan. 2 internal assessment leaked in Hong Kong, the CSS said the 127,467 serious incidents across China last year involved participation of around 1 percent of the population. Of these cases, 476 consisted of attacks on government and Party buildings, while 615 involved violent clashes with police and militia, leaving 1,120 police and Party officials and 724 civilians killed or injured.

 

Church as Subversive

Concerned by the growth of unregistered house church groups in an uncertain political and social climate, the Chinese government has ramped up efforts both to identify Christians and to portray Christianity as a subversive foreign force.

Local governments in China last year reported on continued measures to prevent “illegal” religious gatherings and curb other criminalized religious activities, according to reports from the U.S. Congressional Executive Commission on China (CECC) on Dec. 20 and Feb. 2. (See “Tortured Christian Lawyer Arrested as Officials Deny Abuses,” Feb. 11.)

In recent months authorities have quietly gathered data on church growth using surveys at universities and workplaces, and called meetings at various institutions in the capital to discuss the supposed dangers of foreign religious influence. (See “Officials Grapple with Spread of Christianity,” Feb. 4.)

Raids on unregistered church groups have continued in recent weeks, with police perhaps prompted to ensure tighter controls on church activity. On Feb. 11, police arrested two South Korean pastors and more than 60 Chinese house church leaders from four provinces who had gathered for a seminar in Wolong district, Nanyang city, the China Aid Association (CAA) reported. The police also confiscated personal money, cell phones and books, and forced each person to register and pay a fine before releasing some of the elderly leaders.

Authorities held six of the detained leaders for several days but by Sunday (Feb. 22) had released all of them, Compass sources confirmed.

In Shanghai, police and members of the State Administration of Religious Affairs on Feb. 10 ordered Pastor Cui Quan to cancel an annual meeting for house church leaders, and then ordered the owner of the hall used by Cui’s 1,200-member congregation to cease renting it to Cui within 30 days, according to CAA.

Senior staff at Beijing’s Dianli Hospital on Feb. 6 ordered elderly house church pastor Hua Zaichen to leave the premises despite being severely ill, CAA reported. Government officials had refused to allow Hua’s wife, Shuang Shuying, an early release from prison to visit her dying husband unless she agreed to inform on other Christians, according to Hua’s son. After refusing their offer, Shuang was finally able to visit Hua on her release date, Feb. 8; Hua died the following day.

Both Shuang and her husband have suffered years of persecution for their involvement in the house church movement.

On Feb. 4, police seized Christian lawyer and human rights defender Gao Zhisheng from his home in Shaanxi province, CAA reported. At press time his whereabouts were unknown.

While other incidents have gone unreported, house church leaders in northern China told Compass in January that despite tighter restrictions in the current economic and political climate, they were optimistic about the ability of the church to survive and flourish.

 

SIDEBAR

Disenchantment, Dissent Spread Across China

In December, China celebrated the 30th anniversary of Deng Xiaoping’s “open door” economic reform policy, which had led to a high annual growth rate of some 10 percent. While Party leaders publicly congratulated themselves, an internal party document warned that 75 percent of the financial benefits had gone to only 10 percent of the population, mainly high and middle-ranking Party members and some entrepreneurs.

With the growth rate now seriously dented, relations between Party members and the general public were “about to explode,” the document warned.

The document also referred to an “ideological vacuum in Party and state,” a “moral vacuum in upholding regulations,” and a “vacuum in spiritual civilization,” in stark contrast to the moral and spiritual values held by religious groups.

According to the Research Institute of the State Council, urban unemployment among young people had already risen to 10.5 percent by last June. If foreign investors continued to withdraw funds, the institute warned, this figure could rise to 16 percent or higher, sparking more outrage against the government.

Tens of thousands of factories closed down in the first six months of 2008, well before the full impact of the global recession hit China. By November, 10 million migrant workers were unemployed; most recent estimates put the figure at 20 million, and officials admit this figure will reach at least 35 million by the end of 2009.

Vice-Premier Hui Liangyu, responsible for agricultural affairs, warned in a recent report that 30 percent of all villagers have set up peasant organizations to challenge local government officials and crime bosses. Some groups also have plans to launch armed insurgencies and their own peasant governments.

Several million university graduates will also face unemployment this year, potentially lending their voices and leadership skills to mass protest movements.

An increasing number of intellectuals have already signed Charter 08, a petition issued in December calling for multi-party elections, human rights, press freedom and the rule of law.

On Jan. 7, a prominent Chinese lawyer, Yan Yiming, filed an application with the Finance Ministry demanding that it open its 2008 and 2009 budget books to the public. On Jan. 13, more than 20 Chinese intellectuals signed an open letter calling for a boycott of state television news programs because of “systematic bias and brainwashing,” while a Beijing newspaper ran an article arguing that freedom of speech was written into the constitution, The Washington Post reported in late January.

In response, Public Security Minister Meng Jianzhu warned China’s leaders via state media that, “The present situation of maintaining national security and social stability is grave.”

Many analysts agree that the Chinese Communist Party may be facing its greatest challenge to date.

Report from Compass Direct News