Concerns over China’s stake in Port of Newcastle ownership

Experts have warned that China could turn Newcastle Port - a key strategic asset - into an economic weapon against Australia and are trying to reclaim it.

The federal government should “absolutely” take back control of the Port of Newcastle from a Chinese company before it becomes another weapon in Beijing’s economic arsenal against Australia and its coal producers, according to Peter Jennings, executive director of the Australian Strategic Policy Institute.

The Port of Newcastle, which was privatised by the Baird state government in 2014 in a deal which gave 50 per cent control to Chinese company China Merchants Port Holdings (CMPort), is one of Australia’s most important pieces of strategic and economic infrastructure and is responsible for handling around 30 per cent of the nation’s coal exports, making it vulnerable to foreign interference.

Then-NSW Premier Mike Baird annoucing the sale of 50 per cent of the Port of Newcastle in 2014.

“We have now seen very clearly that China will use economic points of leverage to coerce political behaviour,” said Mr Jennings, who added that Australia is being singled out standing up to Beijing on a range of issues and that the behaviour will get worse before it gets better.

“There is a Chinese expression that says to scare the monkey, kill the chicken, and we are the chicken in this case,” he said.

“If you have a place like the Port of Newcastle where CMPort is able to put on punitive costs that hurt Australians businesses, that will absolutely happen if the Chinese Communist Party tells them to do so.”

The only question, says Mr Jennings “when will it suit China to do so?”

A coal ship entering the Port of Newcastle.

As such, Australia should “absolutely … take (infrastructure such as the Port of Newcastle) into Australian government hands and then sell it back to investors in other countries or Australian entities,” according to the think tank chief.

Already the totalitarian Chinese regime’s attacks on Australia’s coal producers have meant the value of coal exports to the communist state have plummeted from a value of $1 billion per month to just $30 million.

“If you put this deal forward this year you absolutely would not have seen it approved,” Mr Jennings told The Daily Telegraph.

“The age of allowing Chinese companies to own Australian critical infrastructure is gone,” he said, but the problem remains of how to unpack commercial deals made when relations with China were better.

“The government has been reluctant to touch commercial arrangements citing sovereign risk – but it is now very clear that China is different, and because of this coercive behaviour it’s unlike dealing with any other country.”

“If we got rid of this ownership most other countries would see this as Australia cleaning house.”

Crew members of the bulk carrier Anastasia stranded aboard their ship for several months as a trade dispute between Australia and China over coal exports intensifies.

CMPort has also reportedly been investigating the possibility of increasing its footprint at Newcastle, according to shipping industry experts.

According to website port.today, “CMPort intends to implement in Newcastle its “Port-Park-City” development model, which aims to operate its core port business and develop parks and ancillary infrastructure, thereby building a port-centred ecosystem. This strategy was realised in many purpose-built Chinese cities, for instance in Shekou and Shenzhen.”

While the Foreign Investment Review Board can review deals and purchases by foreign entities, The Daily Telegraph understands there is no Treasury Department mechanism to review existing foreign ownership deals sealed before the start of the year.

However, reforms to the Foreign Acquisitions and Takeovers Act introduced a new last resort power giving the Treasurer a further opportunity to review actions for which approvals have been given if exceptional circumstances arise.

Originally published as Concerns over China’s stake in Port of Newcastle ownership