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New register tracks Chinese foreign investment in Australia and shows where the money ends up

Chinese investment in Australian enterprises dropped by 40% last year, according to new figures!

This article looks at why this was and should we be alarmed.

 

China's decline in investment

 

Key points:

  • Between 2014 and 2017 Chinese investment totalled more than $40.4 billion

  • A quarter of the total money went to mining

  • Public administration and safety was the only sector to receive no money

 

The details are revealed in the first comprehensive public database tracking the flow of Chinese foreign investment into Australia, which outlines who spent the money and what they spent it on.

It shows that from 2014 to 2017, Chinese investment totalled more than $40.4 billion.

Investment was at its highest in 2016, at $14.9 billion, but dropped to $8.9 billion in 2017.

"It definitely peaked in 2016 and [came] back really quite a lot by 40 per cent in one year there and I guess looking at the data it will come back again this year," project leader Peter Drysdale, said.

He said there were a few reasons for the sudden decline.

"Either in terms of control in China or controls in Australia or the investment environment in Australia," Professor Drysdale said.

Researchers from the Australian National University compiled the database on Chinese investment in Australia by crosschecking figures from sources such as the Foreign Investment Review Board and the Australian Bureau of Statistics.

"Getting an accurate picture of what's going on is half the battle in having a sensible public discussion" Professor Drysdale said.

"The careful understanding of that is important to the development of a policy approach which will ensure all the risks associated with Chinese investment, from a public interest viewpoint, are covered."

Contact Lloyd's Business Brokers Melbourne for advice regarding international investment from China or USA in your business.

 

Where does China's money go?

Chinese Invest Data Graph

 

Part of the difficulty in tracking Chinese investment is that the investors are scattered. While many are in mainland China, others are based in Hong Kong or Australia.

The research team meticulously trawled through thousands of transactions to put together the full picture.

It showed most of China's money went towards mining and real estate. Mining accounted for a quarter of the total money received over the four-year period.

But it also showed a growing trend of Chinese investment being funnelled into services sectors, such as the health services industry.

 

 

The only sector to receive absolutely no money was public administration and safety

"So it's a more nuanced and mixed picture than we're used to" researcher Shiro Armstrong said.

And that should not be a surprise to Australians.  After all, Chinese investment in Australia is starting to mature, just as other sources of over overseas investment from the US or Japan had matured in the decades prior.

Chinese investment ..."starts to diversify across the sectors, across the economy."

Dr Armstrong said that brought new opportunities for Australian business.

"So whereas we used to dig up a lot of rocks and ship them to China, that will still be a big part of our economic relationship, but their investment is largely coming into tourism, the services sector, services links importantly" Dr Armstrong said.

Most of Chinese investment found its way to urban regions throughout Victoria and New South Wales.

Less than 10% of chinese money went to rural areas.  However researchers expect that the rural areas will see more growth in the future.

 

If you are concerned about the decline in Chinese investment, or would like to capitalize on investment opportunities, talk to Lloyds Business Brokers in Adelaide, Melbourne, Sydney and Brisbane.

 

How much investment comes from China?

Chinese Sector Data

 

The research databases also shed light on how much investment was backed by the Chinese Government, in comparison to private investment.

Within Australian sectors, there has long been concern regarding Chinese state-owned enterprises owning Australian farmland and business. But according to this study, the Chinese Government was involved in less than 20% of all investing.

"So what it's telling us really is that private investment from China is almost as important, just as important, as state-owned enterprise investment" Dr Armstrong said.

"A lot of small-scale investment is coming in as well as the big ticket headline projects."

Companies affiliated with the Communist Party of China were involved in larger deals, which meant that they contributed nearly half of the total dollars invested.

Professor Drysdale said it was hard to glean from a spreadsheet whether that translated into Chinese influence.

"Well, the data itself immediately doesn't tell us directly anything about that" he said.

"But what it makes possible is analysing those issues in a fact-based way, an evidence-based way."

Drysdale claimed that prior to this research, the debate surrounding Chinese investment had lacked those cold hard facts to support such claims.

"To put it frankly, the evidence, the information, hasn't been available to do the kind of analysis that's necessary to make the sort of claims that people have made about Chinese investment in Australia up to this point" he said.

The researchers are now pulling together the data for 2018.

Researchers expect their database will also be replicated in the future to look at the flow of money from the USA, Japan and other countries.

 

By political reporter Alexandra Beech

Courtesy ABC NEWS

 

 
 
 
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