Prime Minister Malcolm Turnbull has rejected suggestions of discrimination against Chinese investors following the federal government's decision to block the sale of Australia's largest private landholding to foreign buyers.
Speaking from Manila where he is attending the Asia-Pacific Economic Cooperation summit, Mr Turnbull said Treasurer Scott Morrison's decision to block the sale of the 101,411-square kilometre S Kidman & Co. estate was made solely on national interest grounds, with the property close to a military test site.
"You would be wrong to assume that there was only one foreign country associated with the buyers so there's no issue of discrimination here," Mr Turnbull told reporters, adding that the property could still be sold if the land was restructured or subdivided.
But the main bidders were Chinese firms. Genius Link Assets Management was believed to have been in the box seat for the property, having edged out rival Shanghai Pengxin's $350 million bid. Two other Chinese firms were also understood to have participated in the bidding.
And despite the Prime Minister's reassurances, one well-placed source said the Chinese government, having consistently called for a level playing field for its companies in Australia, was likely to be watching very closely at an apparent "pattern of behaviour" against Chinese investment.
Controversy over the 99-year lease of the Port of Darwin to Chinese investors with apparent military ties prompted Mr Morrison to flag a wider strategic review into how the sale of national assets and critical infrastructure was assessed.
State-owned electricity behemoth State Grid Corporation of China is also considered a front runner, in a joint bid with Macquarie, for the NSW government's $9 billion electricity transmission network. But the bid has also raised security concerns.
Some Australian agricultural producers said they were worried Chinese investors could look elsewhere if they sensed Australia was adopting a hostile stance to Chinese investment.
"We have had periods in Australian agriculture where we just couldn't attract foreign investment at all and we were desperate for it," S Kidman & Co manager Greg Campbell said.
"At this point in the current cycle it seems like we are rejecting it because it is flowing in readily. That won't last. These things all go in cycles and I think we have to take a longer term, mature view on these things."
The Kidman properties, which include the world's biggest cattle station, failed to gain approval from the Foreign Investment Review Board because one of its properties was too close to the Woomera Prohibited Area – a remote part of the South Australian outback used to test nuclear bombs, launch satellites and track space missions.
"The Woomera Prohibited Area is called a prohibited area for a reason," Mr Turnbull said. "It is actively used for weapons testing and trials and it's an area that obviously raises national security issues."
With the Chinese economy having driven the boom and bust of iron ore and coal prices, Chinese companies are now increasingly focused on obtaining a strategic foothold in agricultural assets overseas.
Chinese meat consumption is growing rapidly as its people get wealthier. The Communist Party is loathe to be beholden to foreign producers but does not have enough arable land or water to meet demand.
In an interview before the sale was vetoed, Genius Link founder and chairman Joel Chang said Australia was the perfect export hub help overcome China's shortage of 1.4 million head of cattle.
"We see Australia as the food hub for the Asia Pacific region. If you look at the region, from south-east Asia to Korea, Australia and New Zealand are the only two that have export capacity," he told The Australian Financial Review.
The National Farmers' Federation said foreign investment in agriculture was always a sensitive matter because of the need to balance the national interest against the need to attract new capital into the sector.
"Agriculture is on the cusp of its boom cycle, but the need for capital investment is a significant roadblock to growth," NFF chief executive Simon Talbot said.
"To realise its potential, the sector needs $1.2 trillion over the next 40 years, sourced both domestically and from overseas."
