Data released by an Australian National University database shows that Chinese investment in Australia has plummeted by over 47 per cent, from $4.8 billion in 2018 to $2.5 billion in 2019.
Further, drawing on data released by the university’s Chinese Investment in Australia (CHIIA) database, researchers found that Chinese investment in Australia has “fallen for three consecutive years since it peaked at $15.8 billion in 2016”.
Chinese direct investment in Australia has been tracked by the database for the calendar years between 2014 and 2019. During this time, the database totalled 361 Chinese investment projects worth $49.3 billion.
Australia’s real estate sector was the biggest driver of Chinese investment over the six-year period, accounting for 24 per cent of investment, while the mining sector comprised 21 per cent of total Chinese investment during the same period.
While the 2019 decline in investment in Australia coincides with low investment by China abroad (Chinese foreign investment dropped by 9.8 per cent last year), it is worth noting that the investment decline in Australia “was sharper”. In fact, the biggest transaction recorded by CHIIA last year was the Mengniu Dairy Company's acquisition of infant formula maker Bellamy's Australia for $1.5 billion.
The ANU team has been collaborating with the treasury and other government departments to develop the CHIIA database. It will provide “a level of detail by industrial sector and investor not previously available”.
“An important characteristic of the CHIIA database is its public nature and its verifiability,” project leader Professor Peter Drysdale said.
“The transparency of the database makes it useful for detailed enquiries and the tracking of particular investments in Australia. This kind of data is not available from other foreign investment databases in Australia.”
2019 was a low-point for Chinese investment in Australia, with CHIIA data showing significant falls in mining, real estate and commercial property, manufacturing and investment in agriculture. However, “modest gains” were seen in construction, finance and education.
The ANU research team posits that the “much sharper decline in Australia” may be related to a number of issues, such as Chinese investment flow pivoting towards emerging markets and “negative Chinese perceptions of the investment environment in Australia”.
“These negative perceptions include a less certain policy and regulatory environment and uncertainty in political relations between China and Australia," Drysdale told Campus Review.
While 2019 investment figures were the lowest in six years, Drysdale said Chinese investment in Australia in 2020 would dip 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," Drysdale told the ABC.
The ANU project leader said Australia’s new regulatory barriers on foreign investment are discouraging more Chinese investment in the country.
"Chinese investors now view Australia as a more difficult place to invest in, there's no question about that," he said. The CHIIA project leader also said he did not envisage the trend shifting anytime soon.
Instead, Drysdale told Campus Review China will invest in countries more closely aligned to its most ambitious investment and trade initiative yet, saying “there has been heightened Chinese investor interest in countries which have taken up China's Belt and Road Initiative”.