Australian politicians should not be dazzled by Chinese money when selling critical infrastructure, such as ports and electricity networks, an international security and policy expert has warned.

Peter Jennings, head of the Australian Strategic Policy Institute and leader of the expert panel advising the government on its recent Defence White Paper, said national security interests also needed to be assessed.

“The problem is the nature of Chinese business, because of its close associations with the Communist Party,” he told 7.30.

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“Chinese companies are nowhere near as transparent, and do not, when they go overseas, disclose the role of the party in terms of a company’s decision making, and do not describe … how that can then link back into the Chinese intelligence establishment.”

With China now Australia’s biggest trading partner, that means any Australian government treads a fine line between the economic benefits of investment and any possible implications for national security.

Malcolm Turnbull will meet with China’s President and Premier. Photo: Getty

“Given the volume of Chinese investment which is potentially coming into Australia now, Australian governments can’t just look at the money, they’ve got to actually understand what the strategic implications are of having so much Chinese investment in Australia, when those businesses can be tied so closely to the Communist Party.”

Australia Week has just begun in China, with a massive trade delegation spruiking the benefits and possibilities of Australia to potential Chinese investors.

Prime Minister Malcolm Turnbull will also spend two days in China holding talks with President Xi Jinping and Premier Li Keqiang.

Mr Jennings said it was important for Mr Turnbull to raise concerns about foreign investment and Australia’s national interest in the meetings.

“I think the best way to deal with that is to be upfront about it, to have clearer foreign investment rules about what can and can’t actually be invested in. One would hope Mr Turnbull would be prepared to have that discussion with the Chinese,” he said.

National security ‘nothing to be embarrassed about’

The Chinese side may raise the recent $500 million purchase by a Chinese group of a 99-year lease to operate the Darwin port.

While the purchase was ultimately approved, it was a controversial decision which generated heated debate in Australia.

“I don’t think Australia should be embarrassed to say that we will have at least a strong protection of our national security interests around critical infrastructure, as the Chinese do around their critical infrastructure,” Mr Jennings said.

Ports will be a major talking point in China this week. Photo: AAP

“There would never be a question of a Chinese port being sold to a foreign country, a business in a foreign country, so why should we be embarrassed about wanting to look after our own national security interests?”

He said Financial Investment Review Board (FIRB) laws had been strengthened and the government was tightening taxation laws for foreign companies, but there was still some way to go in strengthening laws relating to foreign investment in critical infrastructure.

“For example, the poles and wires in New South Wales, the port systems around the country, we need to have a harder look at how much critical infrastructure can really be sold to foreign countries without it starting to do damage to Australia’s national security interests,” he said.

“At least one, if not two of the bidders for the remaining part of the NSW electricity distribution system are Chinese state-owned entities.”

“I think that does present a problem because you’re talking about whether or not the Communist Party effectively can call in favours when it might need to in the event of changed strategic circumstances.

“I, for one, would want to see stronger controls put around, if such a firm is allowed to purchase into the New South Wales system, stronger controls put around what it can and can’t do with that electricity infrastructure.”

-ABC