Chinese Investments in Australia Fall to AUD 1.34 Billion, Down 36% – Study

In 2023, Chinese investment in Australia witnessed a significant decrease, plunging 36% to AU$1.34 billion from AU$2.1 billion in the previous year. This downturn is highlighted in the recent “Demystifying Chinese Investment in Australia (April 2024)” report by KPMG Australia and The University of Sydney. The report, which focuses on Chinese Overseas Direct Investment (ODI) in Australia for the January-December 2023 period, found that healthcare has now surpassed mining as the primary sector attracting Chinese investment.

The year 2023 marked a notable shift in the investment landscape, registering the second lowest value since 2006. It also tied with 2021 for the lowest number of investment transactions, with only 11 deals recorded throughout the year. These trends unfolded despite a marginal recovery in global Foreign Direct Investment, which rose by 3% in 2023 to US$1,365 billion, following a 12% decline the previous year.

Interestingly, China’s global non-financial ODI bounced back to pre-pandemic levels in 2023, hitting US$130 billion. For the first time, investments in countries associated with China’s Belt and Road Initiative exceeded 20% of its total global ODI, a significant development in China’s international investment strategy.

A closer look at the distribution of these investments within Australia reveals that New South Wales attracted the lion’s share, receiving AU$1.01 billion or 82% of the total Chinese investment. Victoria followed with 16% (AU$211 million), and Western Australia trailed with a mere 2% (AU$28 million).

In terms of the source of these investments, there was a slight increase in funds coming from privately owned enterprises (POEs), which rose from AU$641 million in 2022 to AU$878 million in 2023.

The decline in Chinese investment in Australia has been ongoing since 2017, amid a backdrop of global economic uncertainty. In the six-year period between 2017 and 2023, there were 271 transactions, amounting to a cumulative US$23.5 billion. During this contraction phase, Chinese ODI has been predominantly directed towards sectors like mining, healthcare, food and agribusiness, renewable energy, and commercial real estate.

This trend reflects the shifting dynamics of international investment and highlights the evolving priorities and strategies of Chinese investors in the context of the global and Australian economies.