Treasurer Scott Morrison has flatly dismissed suggestions he kowtowed to protectionist crossbenchers by rejecting a Chinese bid to lease NSW electricity assets, labelling such claims "complete crap".
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But China has labelled the Australian government's preliminary decision to block the sale of power network Ausgrid to the state-owned China State Grid on national security grounds as "absurd and almost comical" and warned it could lead to a "toxic mindset of China-phobia".
China's official Xinhua news agency said in an English-language editorial that to "suggest that China would try to kidnap the country's electricity network for ulterior motives is absurd and almost comical".
And NSW Premier Mike Baird has lashed the federal government's handling of the decision, expressing frustration that "this should have been resolved much earlier" though he said other parties remained interested in the lease and he still hoped to secure "an outstanding result" despite numerous "speed bumps".
Prime Minister Malcolm Turnbull backed his Treasurer, stressing the decision to block the potential $10-billion, 99-year lease of 50.4 per cent of Ausgrid was taken purely on national security grounds.
"I can't disclose the advice given to us by the national security agencies for obvious reasons but what I can assure you is the advice we received was absolutely unequivocal. This was not a political decision," Mr Turnbull said.
"We have a very strong relationship with China . . . one that gets stronger all the time," he added, while not answering questions about why the lease of the Port of Darwin had been allowed to go ahead.
Earlier, Mr Morrison rejected former foreign minister Bob Carr's assertion that the decision was made in response to a "witches' brew of xenophobia unleashed by the election", most notably the election of four One Nation senators.
"That is complete nonsense. Frankly the former foreign minister should know better," Mr Morrison told the ABC.
He said it was "complete crap" to suggest the bid had been knocked back in a bid to curry favour with Bob Katter, the One Nation quartet and the protectionist Nick Xenophon Team.
The bidders seeking a 50.4 per cent share of NSW electricity distributor Ausgrid were the Chinese government-owned State Grid Corporation, which provides electricity to one in seven of the world's inhabitants, and Hong Kong-based company Cheung Kong Infrastructure.
The rejection, announced on Thursday, has reignited debate in China and in Australia about Australia's attitude to foreign investment.
It followed Mr Morrison's decision earlier this year to block the sale of Australia's largest private land holding S. Kidman & Co. to Chinese interests, and his predecessor Joe Hockey's rejection of a US takeover of agricultural giant Graincorp.
Mr Baird did not endorse the claims of xenophobia and political posturing, but said: "What we need to remind ourselves is foreign investment is critical wherever it comes from."
He added that there had been a number of milestones during the bidding process at which point concern about the two bidders could have been flagged and that these issues should have been dealt with "many months ago".
The Chinese and Hong Kong based companies bidding for Ausgrid have one week to respond to Mr Morrison's preliminary decision.
There have already been suggestions that one or both companies could come back with a re-jigged bid.
In a statement, CKI said it believed that "the Australian Government must have reasons beyond the obvious which led them to make today's [Thursday's] announcement. The issue is unrelated to CKI. CKI is a global infrastructure company that owns and has a strong successful track record of managing infrastructure assets such as electricity networks, gas networks, and water company in United Kingdom, Australia and New Zealand the past 25 years".
The Australian Chamber of Commerce and Industry said clearer and more transparent rules for "buyers and sellers of assets in Australia".
Labor leader Bill Shorten said Labor supported the move to block the bid "if there's bona fide national security concerns" but called on the Turnbull government to fully explain its reasons for the decision.
"We should be upfront, and earlier in the process," Mr Shorten said. "I understand for months and months this wasn't regarded as an issue, now it's become an issue. If the reasons are bona fide, the reasons didn't change in the last few days."
Decisions to reject overseas investment or foreign takeovers are overwhelmingly popular in Australia. A Lowy Institute poll earlier this year found 87 per cent of respondents were "against" or "strongly against" foreign investment in Australian farmland, for example.
