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SYDNEY (Reuters) – Australia’s government may block China Mengniu Dairy Co Ltd’s <2319.HK> purchase of some of the country’s best-known milk brands, the Australian Financial Review reported on Thursday, citing unidentified sources who blamed “diplomatic issues”.

Treasurer Josh Frydenberg has gone against the advice of the Foreign Investment Review Board (FIRB) which was in favour of approving the A$600 million ($430.98 million) deal, the newspaper said.

That would mark the first government veto since Australia in July announced its biggest shake-up of foreign investment law in almost half a century. That gave the treasurer last-resort power to vary or impose conditions on deals even after FIRB approval, or force divestment in the event of a national security risk.

The revision came partly in response to fear that the economic impact of the COVID-19 pandemic would make buying strategic assets easier for cashed-up foreigners.

The law does not mention any specific

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