Chinese investment in Australia slumps in 2020: ANU

Chinese overall investment in Australia last year dropped more than 60pc to A$1bn ($775mn) from A$2.6bn in 2019 with the impact of the Covid-19 pandemic, their increased political and trade tensions and new Australian investment rules based on national security grounds, according to an Australian National University (ANU) study.

But there was still an increase in investment from China in Australia's resources sector to A$414mn in 2020 from A$147mn in 2019, according to ANU's Chinese Investment in Australia Database (CHIIA). Chinese investment in Australia's resources sector is down from a peak of $A4.6bn in 2017, according to the CHIIA database that started in 2014.

Since 2014 China has invested A$52bn, of which A$11.3bn went to the resources sector and was only behind the A$13.3bn in the real estate sector, said ANU East Asian Bureau of Economic Research director Shiro Armstrong.

"The decline in investment reflects the impact of Covid-19, increased political tensions between the two countries and also the introduction of new regulation whereby investments can be blocked if there are concerns about national security issues. And there was a feeling that fewer Chinese investment applications were made because of fears they would be knocked back anyway," Armstrong said.

The foreign investment reform legislation was passed by Australia's parliament last year. China accounted for around a third of Australia's total exports last year, which was up from 30pc in 2019.

By Kevin Morrison