HONG KONG — Citing national security concerns, the Australian government on Thursday rejected competing bids from Hong Kong and mainland Chinese groups for control of a company that supplies electricity to Sydney and neighboring areas.
Key sectors of Australia's economy, like mining and agriculture, rely heavily on Chinese demand. But local wariness toward China's growing economic influence has risen in recent years amid a wave of Chinese takeovers of Australian businesses.
At the same time, an influx of wealthy buyers from China has helped push up real estate prices in urban centers like Sydney and Melbourne, pricing local residents out of the market.
In response, the Australian government, in accordance with its foreign investment review legislation, has been carefully vetting the sale of key assets to Chinese interests and has blocked several high-profile transactions. Officials have also ordered Chinese buyers to sell homes acquired in violation of Australia's restrictions on foreign investment in real estate.
In the latest such action, the Australian treasurer, Scott Morrison, on Thursday rejected the bids for 50.4 percent of Ausgrid, an electricity provider with a 99-year lease to distribute power in the southeastern state of New South Wales.
Mr. Morrison did not name the bidders, but news reports in Australia last month widely identified them as Cheung Kong Infrastructure, controlled by the family of the Hong Kong billionaire Li Ka-shing; and the State Grid Corporation of China, a government-owned electricity transmission and distribution company that is China's biggest.
"My preliminary view is that the foreign investment proposals put to me for this transaction are contrary to the national interest," Mr. Morrison said in a news release. "National security issues were identified in critical power and communications services that Ausgrid provides to businesses and governments."
Mr. Morrison also emphasized the importance of foreign investment to Australia's economy and, in separate comments to reporters on Thursday, said that the nationality of the bidders was not a factor in his decision, which focused more on the specifics of the proposed deals.
"The national security concerns were not country-specific and relate to the transaction structure and the nature of the assets," he said.
He said the bidders have until next Thursday to argue their cases before he makes a final ruling on the matter.
Representatives of Cheung Kong Infrastructure and of State Grid did not immediately respond to requests for comment.
Ausgrid's coverage area includes Sydney, Australia's biggest city, and covers more than 22,000 square kilometers, or about 8,500 square miles — an area roughly the size of New Jersey.
Australian news reports had estimated a sale of the Ausgrid stake could have brought in more than 10 billion Australian dollars, or $ 7.7 billion, to the state government of New South Wales.
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