Chinese investors turn away from Australia after Canberra crackdown
Investment fell 61% last year after deals were scuppered over security concerns
The value of Chinese investment in Australia collapsed last year in the face of tougher scrutiny by Canberra, a breakdown in bilateral relations and a global downturn in foreign investment owing to the pandemic.
The dramatic drop in Chinese investment came as other members of the Five Eyes intelligence network, including the US and UK, rushed to tighten oversight of foreign investment on national security grounds. New data show Chinese investment fell 61 per cent to A$1bn (US$780m) in 2020, down from A$2.6bn a year earlier and a peak in 2016 of A$16.5bn.
The year 2016 was a high point in Sino-Australian ties that coincided with a free trade deal. In contrast, just 20 transactions were recorded last year.
Chinese investment in 2020 was limited to just three sectors — real estate, mining and manufacturing — a big shift compared with previous years when activity spanned all industries, according to a database tracking Chinese investment managed by Australian National University. Shiro Armstrong, director of the East Asian Bureau of Economic Research at ANU, said the collapse in investment mainly reflected the impact of Covid-19 and tighter scrutiny of foreign funding by Canberra, particularly those from China.
Global foreign direct investment fell 42 per cent during the pandemic while foreign investment into Australia dropped 46 per cent, according to UN data, he added. “This is quite a remarkable story when you think that Australia was the largest destination of Chinese investment globally during the height of the commodities boom. We received much more investment than the US, and that has just collapsed,” Armstrong told the Financial Times.