Editorial | Port in storm threat to China-Australia ties
Bid by Canberra to buy back Darwin facility now that Chinese company is making a profit risks damaging warming relations
Just when frayed relations between Beijing and Canberra are on the mend, Australia’s efforts to balance a security relationship with the United States and its trading relationship with China have hit a snag. China has intervened in a move to unwind Chinese control of a strategic asset – Darwin port on Australia’s northern border. The case has the potential for another flare-up similar to that over the proposal by Hong Kong’s CK Hutchison Holdings to sell off container ports including two strategically and politically sensitive operations on the Panama Canal.
Chinese firm Landbridge Group was awarded a 99-year lease of the Darwin facility in 2015, under a deal approved by the Northern Territory government, but criticised by the then US president, Barack Obama. The port is not far from where US marines conduct exercises.
Investment and management by Landbridge have since turned the port into a profitable operation. Facing criticism ahead of a recent election, Australian Prime Minister Anthony Albanese said his government was working on a plan to buy back the port on national interest grounds, saying it needed to be “in Australian hands”.
Xiao Qian, China’s ambassador to Canberra, said: “Such an enterprise deserves encouragement, not punishment. It is ethically questionable to lease the port when it was unprofitable and then seek to reclaim it once it becomes profitable.” Xiao urged the Australian government to create a fair, transparent and predictable business environment for Chinese companies in Australia.
From China’s perspective, this case may serve as a cautionary tale about investing abroad, particularly in certain countries. Australia, after all, is a US ally. But if the port is returned to Australian hands, there would be doubts whether Australia could stand up to US pressure in future. That is why China has spoken up. There is likely to be a much tougher geopolitical environment ahead.
Canberra should be mindful of warming bilateral relations, with China having lifted trade bans on Australian exports in December. That is thanks in part to a more pragmatic approach from Canberra to relations with Beijing since ties were damaged years ago by security reforms targeting China and a call for an independent inquiry into the origins of Covid-19.