From The Sydney Morning Herald

• Phillip Coorey Chief Political Correspondent
• May 1, 2009

MALCOLM TURNBULL will take aim today at the Rudd Government's embrace of China by calling for the rejection of the bid by the state-owned Chinalco to increase its share in the mining giant Rio Tinto.

Mr Turnbull will also accuse Mr Rudd of being too focused on China, ridicule him for acting as "an intermediary" between the United States and China, and attack him for basing the nation's long-term strategic policy on the assumption China could one day pose a threat.

The Government is yet to rule on Chinalco's $30 billion bid to increase its stake in Rio Tinto from 11 per cent to 18 per cent.

But in a speech to the Lowy Institute, Mr Turnbull will argue the bid in its "current form" is against the national interest because Chinalco, as a state-owned entity, is under the effective control of the Chinese Communist Party.

He will also argue that a large buyer of Australian commodities should not have a position of influence or access in the production of those commodities.

And he will point out that no Australian firm would be allowed to buy a stake in a Chinese resources company because they are all state-owned.

Mr Turnbull's stated position will pre-empt the scrutiny of the bid by the Foreign Investment Review Board. It will make a recommendation in mid-June to the Treasurer, Wayne Swan, who has the final decision.

Mr Turnbull's position also comes just before the start of an inquiry into the Chinalco bid by the Senate Economics Committee. The first 42 submissions to that inquiry were released yesterday. Of these, 27 were from private citizens and all were hostile to the Chinalco bid.

One invokes Anzac Day and says, "We must be vigilant to safeguard ourselves from incursions of a different nature in this time of so-called peace".

The Herald has learned that another six-odd submissions from citizens have been deemed to be overtly inflammatory and nationalistic in tone and the committee has yet to decide whether to make them public.

Mr Turnbull has been under pressure to take a hardline stance. Already, the Nationals senator Barnaby Joyce and the former treasurer Peter Costello have argued against allowing the Chinalco bid.

In February, after Mr Costello spoke, Mr Turnbull said the Coalition would express an opinion collectively after seeking briefings from the Government and other key players.

Rio has threatened to sack 2000 miners if the deal is blocked. Mr Turnbull's position will provide the Government with political cover should it decide to block the deal - or ammunition should it approve it in the name of saving jobs and encouraging foreign investment.

Chinalco's submission released yesterday says that while it is state-owned, it operates at arm's length from Beijing.

"Chinese law ensures that a separation exists between the ownership interests in a [state-owned enterprise] and the management of the commercial operations of the enterprise," says the Chinalco president, Xiong Weiping.

It points out that there was no objection to Chinalco acquiring 11 per cent of Rio Tinto in two separate transactions.

Its subsidiary Chalco already has a stake in the Aurukun Bauxite Project in Queensland.

Mr Turnbull will contend today that Mr Rudd is erratic and awkward in his approach to China. He will say fears about China's rise as a world power are exaggerated.

"It makes no sense for Australia in 2009 to base its long-term strategic policy on the highly contentious proposition that we are on an inevitable collision course with China," he will say.

He will ridicule the Prime Minister for apparently presenting himself as an intermediary between China and the US.

"The risk of Mr Rudd representing himself as some kind of trans-Pacific interlocutor is that he will be perceived by the Americans as being overly-sympathetic to China, and by the Chinese as a bearer of other people's messages rather than as an advocate of his own."