New figures show Chinese investment in Australia is continuing to plummet as distrust between the two countries grows and companies from the mainland turn towards emerging markets.
- Investors laid out $2.5 billion dollars in 2019, roughly half of what they spent in 2018
- An ANU professor says investors are viewing Australia as a more difficult place to invest
- He says it is likely new Australian government regulatory barriers are deterring investors
The Australian National University’s Chinese Investment in Australia (CHIIA) database shows investors laid out just $2.5 billion in 2019, roughly half of the $4.8 billion they spent in 2018.
Chinese investment in Australia peaked at almost $16 billion in 2016 but has nosedived since then.
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There were big falls across most sectors in 2019, including real estate, mining and manufacturing. Investment in agriculture collapsed but picked up slightly in both the construction and finance sectors.
The leader of the database project, ANU professor Peter Drysdale, said there was no single explanation for the precipitous decline.
Chinese companies are increasingly focused on developing markets and Beijing is trying to stem the flow of capital offshore, with foreign direct investment from China dropping globally by almost 10 per cent in 2019.
The drop in Australia has been much sharper, partly because the mining boom — which brought heavy flows of investment from China — has now tailed off.
But Professor Drysdale said Chinese investors were also turning away from Australia because of new regulatory barriers thrown up by the Government.
“Chinese investors now view Australia as a more difficult place to invest in now, there’s no question about that,” he said.
There have been a series of intense political controversies over Chinese investment in Australia in recent years, and the Federal Government has intensified its scrutiny of foreign investment more broadly.
Earlier this year, Treasurer Josh Frydenberg introduced new restrictions designed to stop overseas companies from targeting distressed Australian assets hit by the economic impact of the coronavirus pandemic.
The biggest transaction recorded by CHIIA in 2019 was the Mengniu Dairy Company’s acquisition of infant formula maker Bellamy’s Australia for $1.5 billion.
The political relationship between Australia and China has also become increasingly rancorous, with the two countries mired in a series of disputes over foreign interference, the intimidation of Australian journalists in China, cyber espionage, trade, Hong Kong and the COVID-19 outbreak.
Professor Drysdale said he expected future figures would show Chinese investment in Australia falling even further in 2020.
“In fact, the numbers we see coming in so far in the work we are doing suggest there has been a drop away again this year, so this trend is certainly continuing,” he said.