{"id":23736,"date":"2015-11-24T06:00:04","date_gmt":"2015-11-23T19:00:04","guid":{"rendered":"http:\/\/www.aspistrategist.ru\/?p=23736"},"modified":"2015-12-04T15:36:52","modified_gmt":"2015-12-04T04:36:52","slug":"state-grid-and-australias-national-security-interests","status":"publish","type":"post","link":"https:\/\/www.aspistrategist.ru\/state-grid-and-australias-national-security-interests\/","title":{"rendered":"State Grid and Australia\u2019s national security interests"},"content":{"rendered":"

\"Transgrid\"<\/a><\/p>\n

The State Grid Corporation of China (\u56fd\u5bb6\u7535\u7f51\u516c\u53f8<\/a>), the world’s largest electric utility<\/a> company, is the monopoly power distributor across China in all but five southern provinces and a behemoth with an extensive network of subsidiary companies \u00a0and subordinate research institutes. \u00a0Through this network State Grid has ties to a wide range of defence and intelligence agencies across the PRC.<\/p>\n

State Grid recently unsuccessfully bid for the $9 billion NSW electricity transmission network TransGrid<\/a> in a consortium with Macquarie Infrastructure Real Assets<\/a>. The company\u2019s bid was cleared by the Foreign Investment Review Board<\/a><\/p>\n

In Australia, State Grid is the largest shareholder in the non-listed ElectraNet<\/a> which operates the South Australian electricity transmission network and is seeking to expand its stake<\/a>.\u00a0 There are four State Grid representatives on the ElectraNet board<\/a>,\u00a0 Jiang Xiaojun (\u8523\u66c9\u8ecd), Li Lequan (\u674e\u6a02\u6cc9), Sun Jianxing, and Shi Xinghua. Mr Jiang, who is Senior-Vice President of State Grid International Development<\/a> (SGID) is \u00a0also on the board of State Grid Europe, which has been raising funds for European expansion<\/a>, and the board of Hong Kong Electric Investment<\/a>. He is also a member of the company\u2019s CPC committee<\/a>.<\/p>\n

State Grid has minority shareholdings in gas and electricity distributors in Victoria and NSW. In 2013, Singapore Power sold<\/a> almost 20 percent of listed SP AusNet<\/a> and 60 per cent of the shares in the unlisted SPI (Australia) Assets (branded as Jemena<\/a>) to State Grid Corp. \u00a0Thereby State Grid is now part-owner of Victorian electricity transmission and distribution networks, as well as Victorian, NSW and ACT gas distribution networks and transmission pipelines. The deal was valued at about $5 billion and saw Sun Jianxing<\/a> assume a directorship at Ausnet and Ruan Qiantu<\/a> \uff08\u962e\u524d\u9014\uff09be appointed as Deputy Managing Director of Jemena. Mr Ruan was previously involved in State Grid\u2019s Philippines operations<\/a> and holds a wide range of posts in Shanghai<\/a>.<\/p>\n

It appears that major efforts have been made to reduce political sensitivities to PRC ownership of essential infrastructure in Australia by initially taking only partial shares in these companies. Jemena, however, has just been announced by the NT Government as the preferred bidder<\/a> for the $1 billion North East Gas Interconnector.<\/p>\n

In other global holdings, State Grid has \u00a0interests in power transmission companies in the Philippines<\/a>, Brazil<\/a>, Italy<\/a> and Portugal<\/a>. State Grid\u2019s international operations are pursued through SGID<\/a>, whose CEO is Zhu Guangchao<\/a> (\u6731\u5149\u8d85) and whose party secretary is Li Haixiang<\/a> (\u674e\u6d77\u7fd4). SGID has also been involved in transmission line construction in Ethiopia<\/a> and hydropower construction in Cambodia<\/a>. Subsidiary Heilongjiang Electric Power Company<\/a> is developing business with Russia. Russian Grids and the State Grid are discussing the building of ultra-high voltage power transmission lines from Russia to China<\/a>. Other SGID businesses include global mining<\/a> operations.<\/p>\n

The rise of the Chairman of the State Grid Corporation Liu Zhenya<\/a>\u00a0(\u5218\u632f\u4e9a)\u2014was intimately tied to the support of former Politburo Standing Committee member Zeng Qinghong<\/a>\u00a0(\u66fe\u5e86\u7ea2) whose son, Zeng Wei, has strong Australian connections<\/a>.<\/p>\n

State Grid Chairman, Liu Zhenya, also heads the CPC Committee of State Grid, and all members of the company\u2019s leadership group<\/a> are party members. As such they are ultimately responsible to the CPC Central Committee. Indeed the formal mission<\/a> of State Grid is \u201cto serve the overall work of the party and the state\u201d in that order.<\/p>\n

National security concerns over State Grid development and construction of the national power grid have been most loudly voiced in the Philippines, where again only an initial 40% interest (along with four director positions<\/a>)\u00a0 in the National Grid Corporation of the Philippines (NGCP) has so far been bought by State Grid. In February this year, concerns about the State Grid technicians involved with the Philippines national grid project were expressed by the Philippines National Security Council and Department of Justice<\/a>. It was then announced that the work visas of 16 Chinese experts employed by the NGCP would not be renewed<\/a> when they expired in July 2015. State Grid have said the Philippines government\u2019s actions were related to the ongoing South China Sea dispute between China and the Philippines rather than any in-country activities of the company.<\/p>\n

Egypt<\/a> has also recently decided to end a transmission line contract with State Grid subsidiary China Electric Power Equipment and Technology Co. and assigned their own military engineers to develop it. This appears to have been the $1.8 billion deal<\/a> signed in March 2015.<\/p>\n

State Grid\u2019s networks carry the People\u2019s Liberation Army\u2019s communications. \u00a0In 2012, 10 members of the Information Security Bureau of the Department of Information Technology under the PLA\u2018s General Staff Headquarters visited State Grid headquarters<\/a>\u00a0 to investigate the security of their networks and their information systems and the development of classified security protection regimes.<\/p>\n

State Grid is an influential element in the development of Chinese foreign and strategic policy. In July this year, an article<\/a> by Hui Chunlin<\/a> (\u60e0\u6625\u7433), a lecturer at the Institute for International Strategic Studies<\/a> of the CPC Central Party School, was published on the indaa<\/a> website, run by State Grid-sponsored Yingda Media Group (\u82f1\u5927\u4f20\u5a92\u96c6\u56e2).<\/p>\n

In the article Hui urged China, under the One Belt One Road<\/a> (OBOR) initiative, to expand China\u2019s provision of electricity generation and transmission facilities to the OBOR countries in order to create a China (State Grid)-dominated \u201csystem of inter-connected and inter-operable\u201d energy channels.\u00a0 This would also include a network of ports, highways, railways and energy pipelines. According to Hui the PLA Navy would be used to \u201cguarantee the security of the energy channels\u201d.\u00a0 These are precisely the sort of strategic investments which AIIB<\/a> was created to fund and to which China has managed to induce other countries to contribute.<\/p>\n

This PRC agenda of investing in regional energy grids and economies through State Grid and other state-linked companies is being pursued with vigour. State Grid now has large energy infrastructure holdings in Australia and the Philippines and is seeking more, while the Nari Group<\/a> and NARI Technology<\/a>, both subsidiaries of State Grid, are engaged in power station construction, power transmission projects, photovoltaic plants, hydropower plants, substation contracting and renovation, equipment provision and ash handling systems in the Philippines<\/a>,\u00a0 Pakistan<\/a>, Thailand,<\/a> Indonesia<\/a>, Laos<\/a>, Australia<\/a>, Vietnam<\/a>, Nepal<\/a>\u00a0 and Cambodia<\/a>. Zha Daojiong <\/a>\u00a0has written on how PRC energy companies abroad can manage political risk during this endeavour.\u00a0 At the same time, China is buying long port leases<\/a> and the PLA Navy is seeking new access to ports<\/a> across the region.<\/p>\n

Postscript<\/em>: In correspondence with The Strategist<\/em> State Grid disputed a number of claims made in a previously published version of this post. We offered State Grid the opportunity to write for The Strategist<\/em> putting the company\u2019s views in response, an offer they declined. The author has checked the facts to the best of his ability and The Strategist<\/em> believes this post reflects a fair treatment of the issues raised.<\/p>\n","protected":false},"excerpt":{"rendered":"

The State Grid Corporation of China (\u56fd\u5bb6\u7535\u7f51\u516c\u53f8), the world’s largest electric utility company, is the monopoly power distributor across China in all but five southern provinces and a behemoth with an extensive network of subsidiary …<\/p>\n","protected":false},"author":175,"featured_media":23538,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_mi_skip_tracking":false,"footnotes":""},"categories":[1],"tags":[52,1559,1182],"class_list":["post-23736","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-china","tag-electricity","tag-foreign-investment"],"acf":[],"yoast_head":"\nState Grid and Australia\u2019s national security interests | The Strategist<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" 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