Chinese investment into Australia in 2016 has grown by 11.7 percent to A$15.4 billion making it the highest ever since the global financial crisis. A new report released by Sydney University and consultancy firm KPMG has revealed that a record 103 deals were signed last year between Chinese and Australian companies.
The report called ‘Demystifying Chinese Investment in Australia’ has however warned that Australia may lose out in coming years as Chinese investors look more towards Europe and United States as investment destinations. According to the report in terms of the growth in investment from China, Australia lagged behind the European Union and Brazil.
One of the authors Professor Hans Hendrischke, from the University of Sydney Business School pointed out that the rate of investments from China was in fact slowing down. In a statement Professor Hans Hendrischke said
Australia has proven itself to be a preferred destination for Chinese capital, but we must be cognizant that the growth in investment is slowing compared to other parts of the world such as the United States and the EU
Australia has been the second largest recipient of investment worldwide from China with investments hitting US$90 billion since 2007. The biggest beneficiary has been the U.S. with over US$100 billion. Professor Hendrischke highlighted that the sectors that attracted the maximum investment were health care, commercial real estate and infrastructure projects.
Commercial real estate saw the biggest investment, accounting for 36 percent of all investment from China, followed by infrastructure with 28 percent. Agribusiness has also been evoking increasing interest. Among the sectors which saw a decline in Chinese investment included mining which slipped to $839 million last year.
The state that received the maximum investment was New South Wales followed by Victoria and then South Australia. The Turnbull government has however in recent times been under pressure from some political groups to clampdown on foreign deals. The government blocked two deals involving Chinese companies last year citing national security.
Other blocked deals include a Chinese consortium’s bid for S.Kidman & Co. cattle stations and a proposal from State Grid Corp of China and Hong Kong investor Li Ka-shing to buy out power network Ausgrid. In 2015, the government increased scrutiny for deals that involved selling farmland to buyers from China, Japan and Korea. Under the new rules, land purchases worth A$15 million and more need to receive government approval.