Australia blocks China electricity grid deal

Scott Morrison, the Finance Minister, noted that the grid covers the "critical" supply of power and communications to businesses and government.

Government expresses concern about security risk posed by bidders’ plan.

Australia has blocked a A$10 billion ($10.7b) deal to lease its biggest electricity grid to Chinese and Hong Kong investors because of "national security", after Britain delayed the Hinkley Point nuclear power station.

The Australian move comes as the US authorities laid espionage charges against China General Nuclear Power (CGN), the state company which would have a one third stake in the Hinkley Point project.

British Prime Minister Theresa May has delayed a final decision on whether to allow this construction to go ahead amid concerns that China's involvement could threaten British national security.

The US Justice Department has accused Allen Ho, a CGN engineer based in America, of conspiring with the firm to steal secret technology from the American nuclear power industry. The alleged conspiracy lasted for almost 20 years, from 1997 until April this year.

In Australia, the Government expressed concern about the security risk posed by a plan for two bidders - one from Hong Kong, the other from mainland China - to take a 50.4 per cent stake in Ausgrid, the main electricity network in New South Wales, the nation's largest state.

The network serves 1.6 million homes and businesses in Sydney and beyond.

Scott Morrison, the Finance Minister, noted that the grid covers the "critical" supply of power and communications to businesses and government.

"The national security concerns are not country-specific and relate to the transaction structure and the nature of the assets," he said.

Asked about the specific risks posed to national security, Morrison replied: "The only person who is security cleared in this room to be able to hear the answer to that question is me."

The bidders for the network are understood to be State Grid Corporation, a Chinese company, and Cheung Kong Infrastructure, owned by the Hong Kong billionaire, Li Ka-shing.

Some experts believe that handing control of the network to Chinese entities would increase the risk of cyber attacks and electronic espionage.

Australia has taken a series of steps to block investment from China. The Government has twice prevented Chinese bidders from buying the S. Kidman pastoral estate, one of the largest private landholdings in the world.

Australia has also criticised China's territorial ambitions in the South China Sea, where the country has asserted its claim to a vast area of ocean by building artificial islands, in defiance of a ruling from a court in The Hague.

The tensions have spilt over into the Olympics, with Mack Horton, an Australian swimmer, criticising his Chinese competitor Sun Yang - who was suspended for taking a banned stimulant two years ago - as a "drugs cheat".

China's official media then attacked Australia as a "second-class citizen in the West".

The Hinkley Point project would supply 7 per cent of Britain's electricity.

CGN, the Chinese company, would cover A$10b of the total construction cost of A$30b.

However, the case against CGN in the US raises the possibility that the new power station could be completed with the aid of stolen American technology.

The US Justice Department indictment makes clear that CGN is under the "direct control" of the state council, described as the "highest government authority" in Beijing.

Instead of being a normal commercial enterprise, the CGN is regarded as one arm of Chinese foreign policy.