The $13 billion bid by Cheung Kong Infrastructure (CKI) for the APA Group’s gas pipeline assets may have been scuppered for more reasons than meets the eye. But, could it be saved and what lessons can be learned for future Hong Kong and Chinese bids to invest in key infrastructure assets and projects in Australia.
Few should be surprised by Treasurer Josh Frydenberg’s preliminary decision to block the CKI bid for APA’s critical infrastructure gas pipeline. In his statement of
While the Treasurer has indicated that the main reason for blocking the deal (his final decision is due in two weeks time) would be the fact that it would place a significant proportion of
That would suggest that even if CKI were to find an Australian joint venture to partner with it on the deal it may still be blocked by the government, especially in the context of a federal election that is due to take place in the next six months. The issue is too much of a hot potato to carry into an election. The Australian Strategic Policy Institute (ASPI) is already sounding alarm-bells about Hong Kong companies acting as Trojan horses for Beijing. And a number of crossbench parties, particularly One Nation, could make approval of a re-configured CKI bid an election issue in key seats, particularly in the Liberal National Party base of Queensland.
The real question is what can CKI and other Hong Kong companies do to demonstrate that they are not beholden to Beijing. Old China hands and China watchers, like your current correspondent, know that CKI is a genuine Hong Kong company with global institutional investors amongst its shareholders.
But few backbenchers realise or understand that. If anything there is a need for CKI and other Hong Kong-based companies to engage more with the Australian polity and demonstrate that not all Hong Kong businesses are controlled by Beijing even as the Chinese Communist Party may be strengthening its grip on the Special Administrative Region that is Hong Kong.
What they need to do is undertake a comprehensive government relations and public affairs campaign in order to win the support they need for future investments. To be sure, it is probably too late for CKI to obtain that support for its APA bid; but other Hong Kong companies need to think about the long-game and focus on winning a social licence now so they can invest and operate in Australia in the future, including in sensitive areas such as energy generation and transmission, ports and telecommunications.
With the possibility of a change of government at the next federal