China-Australia ties frayed under former Australian leader Scott Morrison.
Investment into Australia by Chinese private and state-owned companies tumbled in 2023 to the second-lowest level in 18 years, according to a report from KPMG and the University of Sydney.
The analysis estimated that direct investment slid 37% to $892-million from the previous year. In contrast, China’s global outbound investment jumped in 2023, driven by projects in countries participating in President Xi Jinping’s Belt and Road Initiative.
For Australia, there were declines in industries such as commercial real estate and mining that have traditionally attracted Chinese companies, according to the report, whose authors included KPMG’s head of Asia & International Markets Doug Ferguson and its China Business Practice partner, Helen Zhi Dent.
A possible shift in Chinese Belt and Road investment from infrastructure and resource off-take toward processing could herald “competitive challenges” for Australia, the team said in the report.
The data in the report exclude portfolio investments that don’t result in foreign management, ownership or legal control. Also outside the report’s scope are investments stemming from Hong Kong and Macau family offices or private entities that aren’t majority-owned by mainland Chinese corporations.
China-Australia ties frayed under former Australian leader Scott Morrison. Relations began improving after the May 2022 election of Prime Minister Anthony Albanese’s government. Last month, China lifted punitive tariffs on Australian wine exports, signaling an end to a campaign of trade pressure.
China is grappling with a lingering property crisis and weak consumer sentiment, clouding the outlook for the world’s second-largest economy.