Since the 2010s, Chinese companies have invested heavily in Australia, bringing considerable economic benefits to its growth and prosperity. Meanwhile, Chinese investment has been one of Australia’s most contentious political issues over the past decade, resulting in a series of policy restrictions. What has motivated Australia’s strong political opposition to Chinese investment and subsequent policy restrictions? To existing economic, socio-psychological, and geopolitical explanations, I add the role of fringe parties and national security agencies and propose two domestic processes through which they have seized the opportunity to shape Australia’s policy responses to Chinese investment. In the first process, fringe parties emphasize social-cultural concerns to mobilize the public and pressure major parties to shift their policy positions. In the second process, defense and intelligence bureaucracies use national security narratives to persuade political elites into adopting their desired policy positions. Using a combination of elite interviews, archival research, and process tracing, I illustrate the mechanisms by which fringe parties and national security agencies have contributed to the tightening of Australia’s foreign investment regulations in three case studies: mining (2008-2010), agriculture (2010-2015), and critical infrastructure (2015-2019). My findings advance the understanding of economic policymaking and have important policy implications for the China debate in the developed world.