China’s “One Belt, One Road” initiative has attracted global suspicion as a potential means by which the country may gain strategic control of trade links.
It is in that context that last week’s report by Andrew White in The Australian, noting the transfer of ownership of 50 per cent of the Port of Newcastle from China Merchants Union to its subsidiary China Merchants Port Holdings, may be seen.
Both are state-owned enterprises and some may see it as merely an in-house transfer, but Australia’s Foreign Investment Review Board will look more closely at the deal.
By the end of 2016 China Merchants Port Holdings had tied up control of 40 ports in 22 countries.
Last year it spent $US920 million buying Brazil’s second largest container terminal and also an interest in a port in Sri Lanka.
Now it will pay $607.5 million for a 50 per cent stake in the Port of Newcastle, which handles 40 per cent of Australia’s traded coal exports.
The other half of the port is owned by Hastings Funds Management, following the $1.8 billion privatisation of the port in 2014 — one of the more controversial deals by the then NSW Baird government.
Control of the port is now to be regulated by the Australian Competition and Consumer Commission.
The One Belt, One Road initiative re-creates the old Silk Road to China but extends that to Oceania. China Merchants Port Holdings is the key operator of the so-called blue economic passage, which links the world’s ports as part of the plan.
FIRB approval is necessary for the deal and although on paper it may look to be a simple issue, the strategic issues add some complications.
Arguably, by approving the deal unconditionally, FIRB would be giving an official thumbs up to a strategic initiative which, to date, the government and its comrades around the world have not yet wildly endorsed