Australia will review the 99-year lease of a commercial and military port in its north to a Chinese firm, the Sydney Morning Herald reported late yesterday.
The move could further inflame tensions between Beijing and Canberra.
Australian defence officials are checking if Landbridge Group, owned by Chinese billionaire Ye Cheng, should be forced to give up its ownership of the port of Darwin, the capital of the Northern Territory, used as a strategically important base for US Marines.
The Northern Territory government’s deal in 2015 to sell a long-term lease to the port to the Chinese firm was criticised by security experts at the time.
Landbridge, which has close ties to the Chinese military according to media reports, won a bidding process in 2015 to operate the port in a deal worth A$506 million.
The deal came four years after then-President Barack Obama secured a deal to base about 2,500 Marines in Darwin, which is on the doorstep of the Indo-Pacific.
The decision to lease the port to a Chinese company raised eyebrows in the US.
Australian media reported that at the time of the deal, US president Barack Obama expressed anger at prime minister Malcolm Turnbull for not having informed him of the deal and asked Turnbull to keep Washington in the loop in future.
Last week, Prime Minister Scott Morrison said he would act on the port’s ownership if national security concerns were raised.
Relations between Australia and China deteriorated after Canberra last year called for an international inquiry into the origins of Covid-19, prompting trade reprisals from Beijing.
Australia overhauled its foreign investment laws almost a year ago, giving the government the power to vary or impose new conditions on a deal or force a divestment even after it has been approved by its Foreign Investment and Review Board.
China slammed Australia’s decision last month to use the new laws to cancel the Belt-and-Road agreements with the Victorian state government.
There is increasing speculation Morrison may use the new laws to scrap the long-term leases held by Chinese companies not only at the port in Darwin but in Newcastle, New South Wales, too.