Chinese investment in Australia has shrunk. (Australian Broadcasting Corporation Photo)
Chinese investment in Australia fell more than 36 percent in 2018, the second lowest since the 2008 global financial crisis, the Australian Broadcasting Corporation reported.
A recent report by KPMG (KPMG) and the University of Sydney Business School found that despite a 4.2 percent increase in global outbound investment last year, Chinese companies` total investment in Australia fell to A $8.2 billion last year from A $13 billion the year before.
Mining led the decline, with investment plummeting 90 percent to A $ four hundred and sixty three million nine hundred and ninety nine thousand nine hundred and ninety nine, similar to 2016 levels. In 2017, Yanzhou Coal Company (Yancoal) paid A $3.4 billion to buy Rio Tinto thermal coal assets, pushing up the level of investment that year.
At the same time, Australian business real estate sector attracted Chinese investment also showed a decline. Chinese investment in Australian commercial real estate fell from A $4.4 billion in 2017 to A $3 billion last year, covering office buildings, other commercial real estate and apartment developments, according to data consolidated by real estate consultancy Knight Frank (Knight Frank).
Van der (Doug Ferguson), head of Asia and international markets in KPMG Australia, said there were multiple factors behind such a contraction. "it does have something to do with the overall state of the Australian housing market, but it also has to do with the difficulty for Chinese housing investors to get the money to hand over their homes or buy new apartments," he said.
While Chinese investment in commercial real estate still accounts for 11% of total outbound investment, Australia is not the only one that has contracted. Chinese investment in global commercial real estate has generally fallen as China tightened capital outflows to developers and individuals.
China doubles investment in health care in Australia
While the two traditional advantages of Chinese investment in Australia subsided last year, there was still a lot of money flowing into Australia`s health care industry.
China`s investment in Australia more than doubled, accounting for nearly 42 percent of China`s total investment in Australia last year, according to research showing the three "big orders" worth more than A $500 million.
Van der said the main driver came from "private Chinese companies that are aware of the needs of Chinese consumers".
According to reports from KPMG and the University of Sydney Business School, the vast majority of Chinese companies invested in Australia are private companies, accounting for 92 percent of transactions and 87 percent of total investment.
The majority of Chinese investment went to New York (53%), Victoria also attracted 1/3 Chinese capital, South Australia accounted for 8%, Kunzhou less than A $400m and Tasana only three hundred and forty one million nine hundred and ninety nine thousand nine hundred and ninety nine (4%). Western Australia also attracted A $ two hundred and sixty two million nine hundred and ninety nine thousand nine hundred and ninety nine in Chinese investment last year against a backdrop of cooling Chinese mining investment in Australia.
Behind the contraction in Chinese Investment in Australia
Although Chinese investment in Australia has shrunk, research has shown that China`s attitude toward Australia is still positive, with a slight improvement in both sides` views on politics. Australia`s ban on Huawei participation in Australia`s 5G network, coupled with the recent rejection of a number of Chinese investment proposals, has also affected Australia-China relations, although Australia has banned Australia`s participation in the 5G network.
Mr Fan said the contraction highlighted the difficulty for many Chinese companies to get "money out of the sea", with 80 per cent of Chinese private companies surveyed saying there was a problem.
It also reflects China`s shift to the Belt and Road Initiative development and trade (aid) initiative, he added. "under the `Belt and Road Initiative` initiative, China`s outbound investment is bound to flow to Central Asia and Eastern Europe."
But van der believes the strong growth in investment in healthcare shows that China remains optimistic about Australia`s investment prospects. "there is no reason to believe that 2018 alone will signal a long-term end to Chinese investment in Australia. There will also be plenty of opportunities for middle-class consumer demand in China. "
