Chinese investment in Australian companies shrinks to record lows

Chinese investment in Australia has slumped to a record low as the rising superpower shifts its corporate muscle to countries that signed up to its Belt and Road Initiative.

A new report today by consultancy giant KPMG and the University of Sydney shows investment by Chinese private firms and state-owned enterprises in Australian companies dropped 36 per cent to $1.3 billion in 2023, compared with $2.1 billion the previous year.

Chinese investment in mining saw a big decrease from $1.8 billion in 2022 to U$34 million in 2023.

Investors from China are jittery about pumping money into the sector, especially in critical minerals, the report says.

For the first time, the share of overseas direct investment by China – the world’s second-largest economy – going to Belt and Road Initiative (BRI) countries surpassed 20 per cent of its global total.

Since its launch by Chinese President Xi Jinping in 2013, the BRI has poured hundreds of billions of dollars to power the construction of bridges, ports, highways, power plants and telecoms projects across Asia, Latin America, Africa and parts of Europe.

But it has also been regarded with scepticism, especially in Western nations where governments are wary of Beijing’s global ambitions.

Helen Zhi Dent, partner, Chinese business practice, KPMG Australia, and co-author of the report said Chinese investment last year in Australia was the lowest since 2006.

“This reflects the shift in priorities for Chinese ODI, which is increasingly flowing towards Belt and Road Initiative countries as well as towards mining and processing ventures in alternative markets, such as South East Asia,” she said.

“However, the improving cross-border trade environment as demonstrated by the recent removal of wine tariffs could help to kickstart increased Chinese investor interest in Australian businesses.

“This is particularly true in industries where Australian and Chinese businesses have a long history of mutual co-operation, such as resources, food and agribusiness, and renewables.”