China Calls for Fairness After Australia Blocks Rare Earths Deal

(Bloomberg) — Beijing has criticized Canberra for blocking a bid by a Chinese-linked company to boost its ownership in a rare earths supplier, an episode that underscores the challenges the two nations face repairing ties. 

“We hope that Australia can provide a fair and non-discriminatory environment for Chinese enterprises to operate in Australia,” Foreign Ministry spokeswoman Mao Ning said Friday at a regular press briefing in Beijing.

“We will resolutely safeguard the legitimate rights and interests of Chinese enterprises investing and operating abroad,” she added, without specifying any measures.

Australia recently stopped the attempt by Singapore-based Yuxiao Fund to raise its stake in Northern Minerals Ltd. Company executive chairman Nick Curtis has said the fund was owned by Wu Yuxiao, a Chinese national who invests in commodities internationally.

An order prohibiting the move was officially issued by Australian Treasurer Jim Chalmers on Feb. 15, based on advice from the Foreign Review Investment Board. The move was “consistent with other decisions taken by other governments in the past,” Chalmers said Wednesday, without giving further details. 

Bloomberg has been unable to contact Yuxiao Fund. 

Read: China Declared ‘Freeze Is Over,’ Australia’s Trade Chief Says

While relations between China and Australia have improved following the election of the center-left Labor government in May 2022, investment remains a thorny issue. Australia’s decision to block the rare earths deal came up in recent bilateral talks before a planned visit by Australian Trade Minister Don Farrell to Beijing, the South China Morning Post reported Thursday.

Last month, Chinese Commerce Minister Wang Wentao told Farrell that his nation was highly concerned about the security screening of Chinese firms investing and operating in Australia. 

Wang said he hoped Australia would offer a fair, open and non-discriminatory business environment for the companies. 

Beijing has often complained about the treatment of Chinese companies in Australia, such as the exclusion of Huawei Technologies Co. and ZTE Corp. from supplying next-generation wireless equipment to the nation’s telecom operators in 2018. 

In 2020, China Mengniu Dairy Co. dropped plans to buy a local drinks company after the Australian government said it the deal would likely be blocked. China also urged Australia to provide a fair business environment back then as well.

More: Australia, China Trade Ministers Hold First Talks Since 2019

The agreement in January by China’s Tianqi Lithium Corp. to purchase an Australian lithium explorer will be another test of how open Australia is to Chinese investment. Any deal would require the approval of Australian regulators. 

The government in Canberra has already said it plans to be more assertive in scrutinizing foreign investments into key commodities such as lithium. Chalmers said in late 2022 that China’s dominance of the supply chains for electric vehicle batteries poses “challenges and risks.”

–With assistance from Dan Murtaugh.

©2023 Bloomberg L.P.


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