Chinese investment in Australia tumbles by 58%

Investment inflows from China into Australia collapsed by 58% in 2019, revealing a shift in focus towards developing nations that have signed up for Beijing’s Belt and Road Initiative.

Despite record trade between the two nations, Chinese investment in Australia fell from A$8.2 billion in 2018 to $3.4 billion last year – the lowest annual sum since 2007.

A report conducted by KPMG and the University of Sydney surmised that tighter Chinese regulations, a negative perception of Australia’s investment rules and a shift towards Latin American investment through Belt and Road projects were responsible for the sharp drop in investment.

“Chinese (overseas direct investment) into Australia has fallen at a faster rate in 2019 than Chinese investment into other western countries, including the US,” said the report’s author Hans Hendrischke, professor of Chinese business and management at the University of Sydney.

Australian food and agricultural businesses were the biggest recipients of Chinese investment, accounting for 44% of the total figure. The commercial real estate sector was the second largest recipient despite an annual decline of 51%.

Another co-author of the report, Doug Ferguson, expects Chinese investment in Australia to remain subdued in the coming year, as both economies reel from the impacts of the COVID-19 pandemic.

“The impact of COVID-19 will no doubt have an ongoing influence as governments move to protect critical infrastructure and tech, and try to prevent opportunistic acquisitions of companies at undervalued prices,” he said.