In 2022, Chinese investment in Australia increased by 143%, from US$0.6 billion in 2021 to US$1.4b.
A report by KPMG finds over the past 15 years, Chinese investment peaked in 2008, then dropped moderately but remained steady until 2017, before declining to a low of US$585 million in 2021.
Although investment grew in 2022, it is the second lowest year of Chinese investment since 2007.
Between 2007 and 2022, an accumulated total of US$11.5b was invested by Chinese companies in Australia.
WA received the most Chinese investment in 2022 with 77% (AU$1.6b) of Australia’s, followed by New South Wales at 12% (AU$264m) and Queensland at 9% (AU$193m).
Mining was also the clear focus for investors, with 86% of investment going to the WA-dominant sector. Renewable energy was the second largest industry for investment with 12% of the share.
Four deals totalling AU$1.8b consisted of one project in iron ore, one in gold and two in lithium mining.
Chinese investment in commercial real estate saw a large drop from AU$208m in 2021 to AU$14m in 2022. The sector represented 1% of Chinese investment in 2022, as did the high-tech industry.
The report notes a contributing factor to reduced commercial real estate investment is that “obtaining financing and regulatory approvals from China for overseas real estate investment remains difficult”.
“Relatively lower investment returns from the Australian market given increasing costs of land, financing and construction (during and after COVID) is also slowing down investment in commercial real estate,” the report states.
The Chinese state-owned sector invested AU$1.5b in 2022, up from AU$0.2b the previous year. This was across four deals in mining, renewable energy and commercial real estate.
State-owned enterprises (SOEs) made up 70% of total Chinese investment volume in 2022, with the remaining 30% of investment from the private sector.
Chinese investment in Australia compared to investment from other countries
Data from the Department of Foreign Affairs and Trade shows China is Australia’s 10th largest foreign investor, making up 1.9% of the total.
The United States has been Australia’s largest foreign investor for the past three years (2020 to 2022), with investments totalling AU$1.09b in 2022.
A similar trend is seen with the United Kingdom, Australia’s second largest overseas investor – a place it has held since 2020.
The US and UK account for 24% and 22%, respectively, of foreign investment in Australia.
Over the past five years countries which increased their Australian investments the most were Canada (15.5%), Ireland (11.7%), the UK (11.5%), Singapore (11.4%) and France (11.3%).
By comparison, China’s five-year growth in Australian investments is 6.4%.
Where are China’s other foreign investments?
KPMG’s report lists Australia as 12th for China’s top destinations for outward direct investment (ODI), with US$0.76b.
Saudi Arabia has the largest portion of China’s ODI (US$5.55b), followed by Indonesia (US$3.91b), Hungary (US$3.75b) and USA (US$3.19b).
Although, over 2005 to 2022 the major recipients of countries of Chinese ODI were USA (US$193.05b), Australia (US$104.35b), the UK (US$99.87) and Brazil (US$66.09), reflecting differences in China’s long-term ODI behaviour.
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