China calls Australia 'protectionist', warns of reduced investment after the Ausgrid sale was blocked

Scott Morrison’s decision to block the sale of Ausgrid has continued to raise the ire of policy makers in Beijing.

The Chinese Ministry of Commerce has now warned Australia that blocking the sale of the Ausgrid assets to Chinese companies was not only protectionist but likely to result in reduced interest from Chinese firms to invest in Australia.

Reuters reports that Shen Danyang, a China Commerce Ministry spokesman, said in Beijing that, “this kind of decision is protectionist and seriously impacts the willingness of Chinese companies to invest in Australia”.

“China hopes Australia will create a fairer and more transparent environment for Chinese investment”.

Coming the same day that RBA governor Glenn Stevens opened the debate about what exactly is positive about foreign investment into Australia looks like means the Chinese comments may find less resonance than they otherwise would have.

The world is taking notice of China’s barbs at Australia, most notably the call from a strident state publication for the Chinese military to attack and sink any Australian Navy vessels that conduct freedom of navigation efforts in the South China Sea.

Senior FT columnist Gideon Rachman warned this week of the recent exchanges (emphasis added):

Their significance goes beyond the confines of Sino-Australian relations. They speak to the broader tensions between a rising China and the west. For more than a generation, the Chinese public has been fed an official history that stresses the country’s “century of humiliation” at the hands of foreign powers. The notion that the west still conspires against China is widespread.

Australia, an outpost of the western alliance on the edge of the Asia-Pacific region, is in danger of becoming a lightning rod for Chinese anger towards the west in general and the US in particular.

China is Australia’s largest trading partner and now Australia’s largest source of tourists, which are so crucial to helping to drive Australia’s continuing economic transition.

Two Chinese bidders were among the bidders for a controlling stake on the 99-year lease of Ausgrid, the electricity distribution network for Australia’s largest state, NSW.

Morrison invoked the national interest provisions of the foreign investment legislation in his decision and indicated there were national security concerns in play.

But the tensions between what China expects in terms of access to the economy and what Australia is prepared to give look set to continue.

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