Diplomatic standoffs coupled with the impact of the COVID-19 pandemic, saw Chinese investment in Australia fall precipitously in 2020.
Statistics published by the East Asian Bureau of Economic Research of the Australian National University put inward Chinese investment at some A$1 billion in 2020. This represented a 61% decline from the level recorded in 2019. It was significantly down on the 2016 high water mark of Chinese investment into Australia, at A$16.5 billion.
Chinese investment in 2020 was concentrated in mining and real estate.
Associate Professor Shiro Armstrong, Bureau director, pointed to the pandemic, the state of the relationship between the countries and new national security legislation in Australia as the reason for the decline.
Concerns about foreign influence in strategic sectors such as telecommunications, and that foreign investors could acquired distressed Australian assets as a result of the health crisis has led to Australia taking measures to restrict investments on security grounds.
‘It’s the national security test that is being applied to all incoming investment that allows the Treasurer to go back and retroactively disapprove investment, which has created uncertainty. If you’re setting up a factory or setting up a business in a foreign country and operating under their rules, certainty is really important,’ commented Prof Armstrong.
Given the relatively small size of its population, Australia is reliant on foreign investment, but diplomatic tensions between it and China – not least over Australian calls for the origins of the pandemic to be properly established – have been met with measures from China to limit the sale of certain Australian goods.
Australia has also announced the accelerated modernisation of its military, in a move deemed by many observers to be motivated by concerns around Chinese influence and intentions.