Chinese officials have been quick to stress that the Huiyan decision, which stopped what would have been the largest foreign investment in China, was not protectionist, but it is not being seen that way by at least one Australian lawmaker. Sen. Barnaby Joyce, who has been pushing for a review of Australia’s foreign investment laws in the wake of the proposed Rio deal, says the Coke decision “shows that China is being protectionist but wants Australia to offer up its important assets for a quick sale.”
Australia’s Foreign Investment Review Board has already extended by up to 90 days its review of the deal, which would be China’s biggest overseas acquisition. A proposed $443 million investment by Hunan Valin Iron and Steel in Fortescue Metals has also had its review extended.
However open China remains to foreign direct investment in to basket-case companies and to greenfield FDI (and it does seem to be that), the perception that established brands and putative national champions are off-limits will only reinforce the forces of retaliation.