China-Australia Investment Decline Amid Belt and Road Preference Shift

08 Apr, 2024

China-Australia Investment Decline Amid Belt and Road Preference Shift

Investment into Australia by Chinese private and state-owned companies saw a significant downturn in 2023, marking its second-lowest level in 18 years, as revealed by a joint report from KPMG and the University of Sydney. The analysis highlighted a notable 37% decrease in direct investment, amounting to US$892 million compared to the previous year. This decline contrasts with China's heightened global outbound investment, primarily propelled by initiatives linked to President Xi Jinping's Belt and Road Initiative.

The report underscores declines across various sectors in Australia, particularly in industries like commercial real estate and mining, historically favored by Chinese investors. Notably, a shift in focus within Chinese Belt and Road investments, moving away from infrastructure and resource acquisition towards processing, poses potential competitive challenges for Australia.

The data within the report exclude portfolio investments that don't lead to foreign management, ownership, or legal control, as well as investments from Hong Kong and Macau family offices or private entities not predominantly owned by mainland Chinese corporations.

Recent political shifts in Australia, following the election of Prime Minister Anthony Albanese's government, have contributed to improving China-Australia relations. This positive trajectory was further emphasized by China's decision to lift punitive tariffs on Australian wine exports, signaling a potential resolution to trade tensions.