Australia Editor's Picks Top Stories Trending Now World

Chinese investment in Australia nosedives 61% amid diplomatic rift

CANBERRA, Australia:  Chinese investment in Australia plunged to 61% in 2020, the lowest number in six years. The drop in investment comes amid a growing diplomatic rift between the two countries.

The Australian National University’s Chinese Investment in Australia Database (CHIIA) recorded just over $780 million (A$1 billion) in investment.

Only 20 Chinese investments were recorded in 2020, well below the 2016 peak of 111.

Last year’s decline came on top of a 47% drop from 2019 when Chinese investment totalled $1.57 billion.

Dr Shiro Armstrong, director of the East Asian Bureau of Economic Research, where CHIIA is based, said the decline in Chinese investment in Australia outpaced falling global foreign investment last year.

“Foreign direct investment fell globally by 42% according to the United Nations (UN),” Dr Armstrong said in a media release. “UN data is measured differently, but the fall in Chinese investment to Australia was much larger.”

Chinese companies have invested across all sectors of Australia’s economy in recent years, but last year they only bought into the real estate ($357 million), mining ($321 million) and manufacturing ($119 million) sectors.

The drop is at least partly due to Australia’s investment settings during the Covid-19 pandemic.

The government announced temporary measures in March that would subject every proposed investment to scrutiny by Australia’s Foreign Investment Review Board (FIRB).

Previously, a review only applied for “non-sensitive” transactions if the investment was worth $930 million, or $213 million for investors from countries without a free trade agreement with Australia.

The aim was to prevent a fire sale of distressed Australian assets to foreign owners, but it also delayed investments as the FIRB dealt with a backlog, blowing out the review period from 30 days to six months.

The Australian government also announced additional reforms to its foreign investment laws in July, which added a national security test and allowed the treasurer to cancel deals retrospectively.

In August, Treasurer Josh Frydenberg stopped the $600 million sales of Japanese beverage giant Kirin’s wholly-owned Australian subsidiary Lion Dairy and Drinks to China Mengniu Dairy.

The latest figures come against a backdrop of increased diplomatic tensions between Australia and China.

Trade ties have been particularly strained since Australia first called for a rigorous investigation into the origins of the Covid-19 pandemic in April.

The latest figures come against a backdrop of increased diplomatic tensions between Australia and China.

Trade ties have been particularly strained since Australia first called for a rigorous investigation into the origins of the Covid-19 pandemic in April.

According to the database, just 20 new projects attracted Chinese investment, well down from a peak of 111 in 2016. In 2020 Chinese investment was limited to just three sectors: real estate ($461 million), mining ($414 million) and manufacturing ($153 million).

Related story: Australia-China trade row extends amid blames of undermining trade agreement

In 2020, some 86% of Chinese investment in Australia originated from Chinese companies already established within Australia, meaning purchases were made via Australian subsidiaries rather than by foreign firms directly.

Armstrong said in 2020 foreign direct investment fell globally by 42%, according to the United Nations, meaning the fall in Chinese investment in Australia outstripped the global average.

“The UN reports that total foreign investment to Australia fell by 46%, whereas foreign investment to Japan, China, India and some developed countries such as Sweden and Spain rose. Investment to the United States and the United Kingdom plummeted.”

Chinese investment in Australia has been particularly sensitive since the Northern Territory government’s surprise decision to sell the Port of Darwin in 2016, which the federal Labor party has suggested using new deal cancellation powers to unwind.

Major Chinese deals that have been blocked by the federal government include the proposed sale of Australia’s largest landholder, S Kidman & Co, which comprises 1.3% of Australia’s total landmass; the proposed $600m takeover of Lion Dairy; and a $300 million bid for a major Victorian construction contractor.

Dear TNT Reader,

At The News Tribe, our mission is to bring you free, independent, and unbiased news and content that keeps you informed and empowered. We are committed to upholding the highest standards of journalism, as we understand that we are a platform for truth.

Apart from independent global news coverage, we also commit our unique focus on the Muslim world. In an age marked by the troubling rise of Islamophobia and widespread misrepresentation of Muslims in Western media, we strive to provide accurate and fair coverage.

But to continue doing so, we need your support. Even a small donation of 1$ can make a big difference. Your contribution will help us maintain the quality of our news and counteract the negative narratives that are so prevalent.

Please consider donating today to ensure we can keep delivering the news that matters. Together, we can make a positive impact on the world, and work towards a more inclusive, informed global society.

Monthly Subscription Annual Subscription

Visa Card MasterCard American Express Card

We want to hear your Travel Stories.

Do you have a memorable, unbelievable, or favorite travel experience? Share your story with us.