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The One Century Lease: China to Control Australia’s Gateway to the Pacific

A Chinese company now owns part of Australia – what’s new?

The latest perceived threat to Australia’s security is the 99-year lease of part of the Port of Darwin to Chinese corporation Landbridge Group. The Northern Territory government signed the $500 million deal late last year and it has sparked a whirlwind of criticism over threats to national security ranging from intelligence collection, to threats to Australia’s independence and even challenges to US hegemony.

The controversy has garnered high-level international attention: US President Barack Obama rebuked the sale; US Deputy Secretary of State Richard Armitage was “stunned”; Prime Minister Malcolm Turnbull was initially “aghast” according to The Sydney Morning Herald; and Australian Strategic Policy Institute Executive Director Peter Jennings has called the decision a “deep strategic mistake”. Conservative newspaper The Australian and other media sources such as The Financial Review have been leading public furor over the agreement, reporting Landbridge’s alleged close links to the People’s Liberation Army, Chinese militia units and a “senior Communist Party official”.

Critics are concerned that Chinese control over this strategic asset in the Pacific feeds in to the PRC’s global strategic aims and bid for regional domination. However, the massive backlash over the sale of the port and its threats to national security have been both overhyped and misguided, and highlight a growing distaste for Chinese investment in Australia more generally.

Chinese infrastructure investment in Australia is “hardly a secret”

Despite the heavy criticism and media reports, the agreement has solid backing from many departments with Trade Minister Andrew Robb stressing the investment as crucial in developing the port infrastructure and serving to connect Australia with Asia. Prime Minister Turnbull pointed out that massive Chinese investment in infrastructure such as this is no secret. Chinese foreign investment in Australia was worth more than $8.3 billion in 2014 according to a KPMG report, with almost fifty per cent of the investment concentrated in commercial real estate and infrastructure – a percentage forecast to increase.

China specialist and visiting fellow at the Australian National University Geoff Wade warns that there is a “trend” emerging in strategic Chinese infrastructure investments that could serve more than purely commercial motives. There is indeed a trend emerging – China has been on a path of rapid fire acquisition and investment in key regional infrastructure such as ports, dams, highways, power generators and railways - but again, it is not a new one. These private-sector investments are in line with the Chinese Communist Party's (CCP) ambitious and very public efforts to establish economic connectors throughout Asia and foster their ‘One belt, One road’ ambitions. The idea that these large private corporations may have possible links to the state is not surprising and is still characteristic of other nations whose economic development was heavily state-led, such as the Chaebols in Korea and the Keiretsu in Japan. Reports by The Australian that the billionaire owner of Landbridge is a “senior” CCP official should also be taken lightly, as the words ‘billionaire’ and ‘senior official’ do not fare well under China’s anti-corruption campaign.

Port Darwin a strategic gateway to the Pacific?

Darwin harbour represents a key strategic outpost for Australia to access the Pacific and is home to a number of military bases which host more than 100 naval ships per year. At a parliamentary hearing regarding security concerns over the lease of Port Darwin, it was suggested that Chinese control of the port could be used to collect intelligence on Australian and US warships and strategies in the Pacific. The Australian Secretary of Defence Dennis Richardson labelled these security concerns as “absurd” and “alarmist nonsense”.

The Department of Defence was consulted about the privatisation of the port, expressed no concerns and signed a comprehensive access agreement. Moreover, under Australian law if national security is threatened, the military has the rights to take control of the port if necessary.

The potential for Landbridge to undertake operational control of the port has also been drastically exaggerated – the company has been leased just two wharves to implement their multimillion dollar infrastructure development. Yet critics have argued that growing economic control is a precursor to strategic regional domination – so should we be concerned about China’s presence in the Pacific?

China is dominating the global shipping industry and already has far reaching access and a large presence along the maritime Silk Road in Asia, as well as investing increasing amounts of foreign aid into the vulnerable islands of the Pacific. China has now replaced Australia as the largest donor of development assistance to Fiji and other islands. Against the backdrop of sweeping foreign investment by Chinese companies not only in Australia but globally, the leasing of two wharves of Port Darwin to Landbridge is of little significance when placed in the context of China’s larger ambitions to develop regional infrastructure and create ‘one road’ of prosperity using land and bridges.

Luisa Cools is the China Fellow at Young Australians in International Affairs.

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Image credit: Z-Lux14 (Flickr: Creative Commons)


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