CHINESE INVESTMENT IN AUSTRALIA

Research by the University of Sydney found that total Chinese outbound direct investment (ODI) in Australia in 2013 was US$ 9,115 million, reduced from US$ 10,105 million in 2012.

The Chinese investment profile is changing. For the first time in 2013 Chinese investment in Australia was not concentrated in the mining sector. We experienced a shift towards a larger number of smaller to medium sized deals and a larger share of private Chinese investors. But this did not make up the gap in mining investment.

Australia narrowly lost its mantle in 2013 as the world’s top destination for Chinese outbound direct investment (ODI). In an increasingly competitive international market for attracting Chinese capital, Australia’s ranking for accumulated global ODI dropped to second position behind the USA, as did our competitive ranking for the 2013 calendar year, again in favour of the USA. Australia now ranks behind the USA but ahead of Canada, Brazil and Britain.

In 2012, Australia and the USA were on par – each with 12 percent of China’s annual global ODI volume. In 2013, the USA attracted 17 percent while Australia attracted 8 percent of China’s annual total ODI.

Australia has more work to do to continue to attract Chinese investment from an increasingly competitive global market. The 10 percent investment value fall from 2012 should serve as a warning that Chinese investment remains volatile.

Key policy settings such as FIRB, FTA, migration and general policies to reduce Australian domestic operating costs, increase productivity and the speed of project approvals must be delivered and implemented.

In 2013 there was a noticeable uplift of investment in the commercial real estate sector with a surprisingly large number of deals – 20 – amounting to a total value of US$ 1,290 million. Meanwhile the downward trend in new mining investment continued, from US$ 5,693 million in 2012 to US$ 2,133 million in 2013.

Victoria for the first time stands out as the top state destination for Chinese direct investment in Australia, attracting nearly half of 2013 Chinese investment. New South Wales attracted more investment compared to 2012, mainly due to an increased volume in commercial real estate investment. Western Australia lost its dominant position, capturing much less Chinese capital than usual as a result of the slow down in new mining investment.

You should remain positive about the future. China’s Premier recently stating that the Free Trade Agreement with Australia will be accelerated, and those Chinese companies will invest over US$ 500 billion internationally over the next five years are very strong indicators of trade and investment growth.

Australia has traditionally received around 12 percent of this share of spending so the size of the prize is very significant.

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