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1 Mar, 2021 10:19

Chinese investment in Australia plunges to RECORD LOW amid escalating trade row

Chinese investment in Australia plunges to RECORD LOW amid escalating trade row

New data from the Australian National University (ANU) showed Chinese investment in Australia dropped by more than 61 percent in 2020, to just over a billion Australian dollars (US$780 million) – the lowest in the past six years.

According to figures from the Chinese Investment in Australia Database (CHIIA), the drop followed a 47 percent fall in 2019, when Chinese investment totaled US$1.57 billion. It was also well short of the peak of US$12.7 billion recorded in 2016.

“It reflects the effects of Covid, but also more scrutiny of foreign investment by the Australian government, particularly that from China,” said Shiro Armstrong, Director of the East Asian Bureau of Economic Research, where CHIIA is based.

The number of Chinese investments recorded was only 20 – well down from a peak of 111 investment projects in 2016, the ANU said.

According to the research, 45 percent of the Chinese investment last year was in rental, hiring, and real estate services, while 40 percent was in mining and 15 percent in manufacturing. Other sectors, including transport, energy, construction, healthcare, and agriculture, which had seen Chinese investment in previous years, recorded none in 2020.

Also on rt.com China turns away Australian wine amid escalating trade row

The ANU also found that, in 2020, about 86 percent of Chinese investment in Australia originated from Chinese companies already established in the country, which means purchases were made via Australian subsidiaries rather than directly by Chinese companies.

Armstrong told the Xinhua news agency that the investment environment in Australia “has become more uncertain,” adding that the decline of Chinese investment could result in lower asset values in Australia from removal of a large source of capital and a large bidder, as well as the retreat of economic integration between the two nations. “Foreign investment increases trade and can act as a ballast in relations between countries,” he said.

READ MORE: Australia’s economy may NEVER return to previous growth due to trade row with China – report

Economic tensions between China and Australia have escalated in recent years after Australia began cracking down on Chinese investment in the country. Relations deteriorated further after Australia banned Chinese telecoms Huawei and ZTE from its 5G rollout. Tensions were raised again last year, when Australia called for an international inquiry into the origins of the coronavirus outbreak, prompting accusations from Beijing that Australian lawmakers were acting on orders from Washington.

In response, China has imposed trade tariffs on Australian goods, including barley, wine, beef, and lobster.

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