Chinese control of Darwin port not in nation’s interest

If Chinese-owned company Landbridge refuses an offer from a US fund to buy the Port of Darwin, and no Australian offer emerges, Anthony Albanese will need to make good his commitment during the election campaign to force the port from Chinese hands if no suitable buyer emerged. Foreign affairs and defence correspondent Ben Packham reveals that New York-based Cerberus Capital Management will make a formal offer in coming days to buy the port from the Landbridge Group’s billionaire owner, Ye Cheng, an associate of senior Chinese Communist Party figures. The Australian understands that Cerberus will offer more than the $506m that Landbridge paid 10 years ago for its 99-year lease. The offer, coming from China’s economic and military arch rival the US, will annoy the CCP, especially because Cerberus Capital Management has strong ties to the Trump administration. Until recently, the fund was run by its co-founder, Steve Feinberg, who was confirmed in March as US Deputy Secretary of Defence.

China’s outspoken ambassador to Australia, Xiao Qian, who visited the port last week, has made Beijing’s displeasure clear. In a statement, he said the economic structures of China and Australia were “highly complementary” and the economic and trade co-operation afforded by the port served both nations. China and Australia were “comprehensive strategic partners” and should foster “mutual trust”, he said. The Landbridge Group secured the lease for the port a decade ago and had since made significant improvements, turning it from losses to profits. It was ethically questionable, Mr Xiao said, to lease the port when it was unprofitable and then seek to reclaim it once it became profitable.

The future of the port, however, which is an important strategic asset as well as an economic asset, is a matter for Australians to decide through the Albanese government. In October 2023, a review by the Department of Prime Minister and Cabinet concluded that Australians could have confidence that their security would not be compromised by the lease and that the nation was a competitive destination for foreign investment. The Prime Minister accepted the report. Public attitudes have hardened since then, however, because of China’s regional aggression and its deployment of a flotilla of warships that circumnavigated our continent in February and conducted live-fire drills under the busy Australia-New Zealand flight path. Since the lease of the Darwin port in 2015, China has become increasingly aggressive in its arms build-up across the Asia-Pacific region. It has claimed vast swathes of the South China Sea and disputed islands claimed by The Philippines and other nations.

Pre-election, Mr Albanese said he wanted the Port of Darwin returned to “Australian hands”, ideally under the ownership of a domestic superannuation fund. But, he said, “if it reaches a point where the commonwealth needs to directly intervene, then we’d be prepared to do that”. While not Australian, Cerberus Capital Management could be expected to clear the government’s risk-based foreign investment approvals process. The company has about $US60bn ($92bn) worth of assets under management and in 2022 bought the strategically important Agila Subic Shipyard in The Philippines amid concerns over a potential takeover by state-run Chinese firms.

The next move on the port is up to Landbridge to negotiate with Cerberus. It appears from the tone of Mr Xiao’s statement that the CCP is not keen on a deal. Landbridge is a multinational company involved in the port and logistics, oil and gas, real estate and tourism, and manufacturing and trade. If it is ready to sell it will demand a high price. It remains to be seen what blowback, if any, the issue draws from the Chinese government. Whatever the reaction, a change in ownership of the port had bipartisan support during the election campaign. It needs to happen.