Chinese investment in Australia plunges to record low

Chinese investment in Australia fell by over 61 per cent in 2020, according to new data from the Chinese Investment in Australia Database (CHIIA) at The Australian National University.

This follows a 47 per cent drop in 2019, and is the lowest number recorded over the past six years.

CHIIA recorded just over $1 billion of investment in 2020, down from $2.6 billion the year before and well short of the peak of $16.5 billion recorded in 2016.

The number of Chinese investments recorded was only 20 well down from a peak of 111 investment projects in 2016.

In 2020, a huge 86 per cent 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.

Dr Shiro Armstrong, Director of the East Asian Bureau of Economic Research where CHIIA is based, said this is a pattern that intensified in 2019 when 91 per cent of new Chinese investment was sourced from within Australia.

“In 2020, the year of COVID-19, foreign direct investment fell globally by 42 per cent according to the United Nations,” Dr Armstrong said.

“UN data is measured differently, but the fall in Chinese investment to Australia was much larger.

“It reflects the effects of COVID but also more scrutiny of foreign investment by the Australian government, particularly that from China.

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

CHIIA has tracked Chinese investment in Australia from 2014-2020. In that period, almost every sector of the Australian economy has seen Chinese investment activity.

But, in 2020 recorded Chinese investment was limited to just three sectors: real estate ($461 million), mining ($414 million) and manufacturing ($153 million).

The full dataset is available at www.chiia.eaber.org.