The Australian government is cracking down on Chinese state-owned firms eyeing distressed local businesses during the coronavirus pandemic.
Treasurer Josh Frydenberg has declared there will be a zero dollar approval threshold for all proposed foreign investments of Australian businesses and residential real estate.
His announcement came into effect at 10.30pm, AEDT, on Sunday after federal Liberal MP Andrew Hastie called for the Foreign Investment Review Board to be alert to the possibility of Chinese firms buying up distressed Australian assets.
The Australian government is cracking down on Chinese state-owned firms eyeing distressed local businesses during the coronavirus pandemic. Treasurer Josh Frydenberg has declared there will be a zero dollar threshold for all proposed foreign investments of an Australian business or business entity
Mr Frydenberg, the Liberal Party’s deputy leader, stressed the measures were temporary and would ‘remain in place for the duration of the current crisis’ with no mention made of China in his media statement.
‘These measures are necessary to safeguard the national interest as the coronavirus outbreak puts intense pressure on the Australian economy and Australian businesses,’ he said.
The Treasurer added this was not an investment freeze even though FIRB will be required to approve of any investment ‘regardless of value or the nature of the foreign investor’.
‘In doing so, the government will prioritise urgent applications for investments that protect and support Australian business and Australian jobs,’ Mr Frydenberg said.
‘Even in these uncertain times, Australia continues to welcome foreign investment, which remains vital to our long-term economic success and stability.
‘The government recognises that foreign investment will play an important part in helping many businesses get to the other side – securing jobs and supporting our economic recovery.’
China is Australia’s biggest trading partner and in the 2018-19, made up 49.8 per cent of foreign approvals to be the top source of overseas acquisitions or investments, FIRB data showed.
Hong Kong, which has been part of China since 1997, was a distant second on 5.4 per cent.
By value, however, the United States was the No.1 investor in Australian businesses during that financial year with China in the fifth spot behind Canada, Singapore and Japan, with Hong Kong in sixth place.
He made the announcement on Sunday after federal Liberal MP Andrew Hastie (pictured) called for the Foreign Investment Review Board to be alert to the possibility of Chinese firms buying up distressed Australian assets
On Friday, Mr Hastie told Daily Mail Australia the government needed to be particularly vigilant about the possibility of Chinese firms seeking to buy up distressed Australian assets.
‘Now is the time to keep our guard up,’ he said.
CORONAVIRUS CASES IN AUSTRALIA: 4,220
New South Wales: 1,918
South Australia: 305
Western Australia: 328
Australian Capital Territory: 78
Northern Territory: 15
TOTAL CASES: 4,220
‘We’ve taken some big economic hits and we need to protect ourselves from predatory behaviour.’
Mr Hastie, an outspoken critic of China, said the freight services of major airlines would be a particular target.
‘Authoritarian states will be looking to snap up distressed businesses and assets, particularly ones that are critical to global supply chains — like aviation and cargo freight,’ the member for Canning said.
‘We need to stay vigilant, especially those who are responsible for reviewing foreign investment.’
Clive Hamilton, a professor of public ethics at Charles Sturt University’s Canberra campus, said state-owned Chinese firms would be looking to buy troubled Australian companies.
‘Australia should tighten its foreign investment filter so that Australian companies have plenty of time to get back on their feet,’ the author of Silent Invasion: China’s Influence In Australia told Daily Mail Australia.
‘There’s a significant risk that Chinese companies, including state-backed ones, will buy up Australian companies crippled by the coronavirus lockdown.’
Mr Hastie, an outspoken critic of China, said the freight services of major airlines would be a particular target. Pictured is a Qantas Freight jet
Outside of the coronavirus pandemic, the Foreign Investment Review Board is required to approve any proposed foreign acquisition of agricultural businesses worth more than $60million.
Last year, FIRB allowed the partially state-owned Hong Kong-listed firm, China Mengniu Dairy Co, to buy Australian baby formula company Bellamy’s for $600million.
Aviation would be a bit trickier.
Qantas must maintain its headquarters in Australia under privatisation rules introduced by a federal Labor government in the early 1990s, but foreign interests can still buy a stake in the airline.
Divisions of the airline could possibly be sold off, with the flying kangaroo airline this month retrenching 20,000 staff, or two-thirds of its workforce, as COVID-19 forced it to suspend international flights until at least May.