Australia softens foreign interference measures, but China ties seen further strained

SYDNEY (Reuters) - Australia on Friday softened proposed foreign interference laws to secure parliamentary support for legislation that threatens to further strain ties with major trading partner China.

Less than a year ago, trade was riding high at a record A$170 billion ($130 billion) last year, but is now threatened by a diplomatic rift over Prime Minister Malcolm Turnbull’s comments about Beijing meddling in Canberra’s domestic affairs.

Late last year Turnbull cited “disturbing reports of Chinese meddling” as justification for the new tougher legislation, though the bill stalled amid political opposition to several elements.

Keen to push through the bill, Australia’s center-right government said the Foreign Influence Transparency Scheme would now not require executives and lobbyists connected to private multinational companies to register as foreign agents.

“We’ve narrowed the focus of the bill with this drafting to companies, particularly, who show and exhibit a degree of control on the part of foreign governments or foreign political organizations,” Australian Attorney General Christian Porter told reporters in Western Australia state.

The opposition Labor party has said it will support the revised bill.

Andrew Hastie, chairman of parliament’s joint intelligence and security committee, said foreign interference laws must be tightened as authoritarian regimes look to steal U.S. secrets through Canberra’s membership of the “Five Eyes” intelligence alliance.

“Five Eyes” groups Britain, Canada, New Zealand and the United States, in addition to Australia.

The foreign interference bill is likely to be introduced in parliament soon and adopted by the end of July.

“China strongly objected to being singled out by this legislation,” said James Laurenceson, an expert on the two nations’ economic ties at the University of Technology in Sydney.

In Beijing, a foreign ministry spokeswoman said regardless of whether the proposed legislation was specifically targeting any country, China relied on a basis of “mutual respect and non-interference” in building ties.

“We never, unlike some other countries, try to carry out so-called infiltration or interference in the domestic politics of other countries,” Hua Chunying told a daily news briefing.

In a request whose outcome could signal just how strained ties are, Australia asked China to approve a visit by Foreign Minister Julie Bishop for the latest in a series of annual meetings of foreign ministers held since 2014.

Six Australian wine companies, including Treasury Wine Estates Ltd, the world’s biggest-listed winemaker, have faced delays getting products through Chinese customs this year.

Despite Australian efforts to ease the curbs, wine continues to struggle to penetrate the industry’s most lucrative market, expected to be worth more than A$1 billion this year.

Australian cattle grazers and citrus growers also fear they are being sidelined by China as a result of the row.

Canberra’s bid to mend ties with China, however, has been hampered by Beijing’s reluctance to meet Australian lawmakers.

Trade Minister Steven Ciobo was largely shunned on a three-day trip last month, despite being the first elected Australian official to visit China in more than seven months.

Australian and Chinese leaders have met annually since 2014, though the diplomatic row has analysts fearing Turnbull’s scheduled visit to Beijing this year may not happen.

Reporting by Colin Packham and Jane Wardell; Additional reporting by Philip Wen in Beijing; Editing by Toni Reinhold and Clarence Fernandez