How private is private in China?

Another issue is that, even if it can be established that a successful Chinese company is unambiguously privately owned, the management will nevertheless be extremely sensitive to the political environment in which they operate well beyond similar concerns enterprises in Australia face.

Whether or not a private entrepreneur is a genuine believer in the ruling party in Beijing – most, in my experience, are at best indifferent – he or she will nevertheless find it in their own personal interest as well as of their company to form close ties with the Party. In many cases, they become party members themselves.

A general rule of thumb is that the larger and more successful a Chinese entrepreneur's business, the most likely it will be co-opted in some way by the ruling party. The decision-making of management will, at the very least, be driven in part not wanting to make enemies of powerful people in Beijing.

One other point is that Chinese private companies are very sensitive to popular nationalistic sentiment on issues – often stirred up by the authorities – and in some cases may also genuinely share the same views as Beijing. It was revealing, for example, how many of China's leading 'private' technology companies, Baidu and Tencent, late last year took a very public stance in favour of China's ownership of the contested Diaoyu/Senkaku Islands. Clearly leading Chinese private hi-tech companies are not averse to taking actions in support of the stance of Beijing that go beyond pure commercial decision-making.

China is, of course, not the same thing as Huawei. Just as in many cases it may not be possible to establish any direct involvement in day-to-day management of a private company by Beijing. But it would be unwise to think that management of these companies are not very careful to make sure they do not take actions at odds with established Party positions.

For example, if our longest serving foreign minister were to establish the Alexander Downer Society for Religious Liberty in China, how long do you think his directorship at Huawei Australia would last?

As is the case with investment from Chinese state-owned enterprises, I would argue the key question is not whether a private company is controlled by Beijing. This should be assumed at least in some respect in both cases.

Rather, the issue is whether the particular investment made can be said to be a national security risk. In many cases, outside of sensitive industries, it will not be an issue.

Equally, Australia's corporate and political leaders should not kid themselves that the character of Chinese 'private' companies are really much like what they have had experience dealing with in their careers to date.