Federal Treasurer Scott Morrison has blocked the 99-year lease of Ausgrid. Credit:Bradley Kanaris 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. NSW Premier Mike Baird did not endorse the claims of political posturing, but said: "What we need to remind ourselves is foreign investment is critical wherever it comes from."

A street light in front of power lines hanging from an Ausgrid transmission tower in Sydney. Credit:Bloomberg Unlike the sensationalist tabloid Global Times, which has launched numerous assaults on Australia in recent weeks, Xinhua's comments are particularly significant given they are generally believed to closely reflect the official government line - that the decision is another perceived case of Australian bias against Chinese investment amid broader inconsistency in its foreign investment review regime. At the government level, the blocked sale of the sprawling Kidman cattle estate to a privately-owned Chinese bidder had been explained to Chinese interlocutors in terms they can understand: selling a chunk of Australia "the size of Zhejiang province" would just prove too politically sensitive domestically. But the Ausgrid decision may prove harder to justify, given both bidders involved – State Grid and the Hong Kong privately-owned Cheung Kong Infrastructure – already have extensive investments in Australian electricity networks across Victoria, South Australia and Western Australia. State Grid, as part of a consortium, was also in the running to buy NSW electricity transmission network Transgrid, eventually losing out to a joint bid from Canada, the Middle East and Australia's Hastings Funds Management.

"Every transaction is different, every asset is different and you just can't draw linear lines between different decisions and draw the assumptions that I think many are making and are making falsely," Mr Morrison said on Friday. But from the Chinese perspective, it doesn't absolve the government in what it sees as a muddled foreign investment regime, with Australia putting up major infrastructure assets for auction only to then block them from sale nine months down the track, citing national security concerns. It does not augur well for Chinese interests circling other planned sales, including the Port of Melbourne. Opposition 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." It also a signals a shift to a more protectionist stance in Australia's foreign investment review regime, reflecting both the make-up of Australia's new upper house, and the recent appointment of former spy chief David Irvine to FIRB.

Mr Irvine has been vocal in the past in warning that Beijing already has the weapons in its cyber arsenal to shut down Australia's electricity grid. While Mr Morrison was tight-lipped over the specifics of the national security concerns briefed to him, the long-term strategic concerns are in plain sight – it is impossible to predict what the global strategic environment would look like in "50 years, or 90 years", as one government source put it. This is hardly likely to go down well in Beijing. Zhang Yongjun, the deputy chief economist at the China Centre for International Economic Exchanges, a prestigious think tank with close ties to China's top economic planning body, said the decision highlighted the lack of transparency in Australia's foreign investment review regime. "It definitely will mean relevant government departments will have more thoughts when considering Australia's investment environment," Mr Zhang told Fairfax Media. China State Grid provides electricity to one in seven people worldwide and is aggressively acquiring energy assets globally as Chinese President Xi Jinping seeks to overhaul the country's bloated state-owned enterprises. State Grid already owns major stakes in the South Australian, Victorian and Western Australian power networks through Jemena, ElectraNet and other holdings.

Blocking the privately-owned Cheung Kong Infrastructure (CKI), controlled by Hong Kong billionaire Li Ka-shing, is more of a surprise. CKI said on Thursday that Australia "must have reasons beyond the obvious" for blocking the deal. It could be that CKI is the collateral damage in the Australian government trying to prove that it has not singled out mainland Chinese investment. Loading It could also be seen, however, as evidence that Australia is wary of increasingly close ties between Hong Kong's elite and Beijing. CKI holds major stakes in Victoria and South Australia's power grids. with James Massola, Michael Koziol