Treasurer Scott Morrison is under fire for blocking the sale of NSW electricity assets to China.

Morrison said national security concerns meant the estimated $10 billion AusGrid sale – which would have been the largest single government privatisation – could not go ahead.

The Chinese Government-owned State Grid Corp and Hong Kong-listed Cheung Kong Infrastructure were bidding for a 99-year lease on just over 50 per cent of Ausgrid, which runs the ‘poles and wires’ in parts of Sydney, Wollongong and the Hunter region.

The NSW Government had pinned its hopes on the deal, to help raise funds for infrastructure projects.

NSW Treasurer Gladys Berejiklian says there are plenty of other bidders.

The story has made it to China, where an editorial in official state press the Xinhua News accuses Australia of “China-phobia” and “paranoia”.

“Given China’s dramatic development, huge population and unique culture, it is understandable for some countries to have concerns over China’s role and impact on the world.”

But it warns that “fear and bias” over China’s growth created “toxic mindset of China-phobia and blockade win-win co-operation”.

It said Australia was hindering growth for both countries.

Former New South Wales premier Bob Carr says the Federal Government's decision was a sign of the political times.

“I don't want to make a negative interpretation about Australia and Australian policy if I can avoid it, but it would appear to be that this is a reaction to that elevation of xenophobia and economic popular sentiment stirred up by the last election result,” he told the ABC.

Federal Opposition Leader Bill Shorten backed a similar line, suggesting the Government is “horse-trading” with One Nation.

“There's no doubt the Government is twitchy about the crossbench and you have to wonder if the Government is trying to make One Nation happy and Nick Xenophon happy,” Mr Shorten told reporters.

“This is a government in full horse-trading mode with the crossbench because this Government, because of their election result, hasn't convinced Australians of the merit of their policies.”

The Treasurer gave a short response.

“I don't trade on national security,” Mr Morrison said.

Finance writer Tony Boyd has covered the deal’s winners and losers in detail.