What are the key findings of the new Demystifying Chinese Investment in Australia report?
2013 was a very interesting year for Chinese investment. Based on KPMG and University of Sydney data, the United States for the first time replaced Australia as the number one country for receiving Chinese capital.
Overall in 2013, Chinese investment into Australia fell by 10 percent down to AU$901 billion. But on the positive side there’s been an increased level of activity and diversification of Chinese investment into our real estate, and to a lesser extent our agribusiness sectors.
Why are these results significant?
Many countries around the world are competing hard with Australia to attract Chinese capital and Australia’s movement to number two shouldn’t be too alarming, but it does send out some messages that other countries are attracting Chinese capital; we need to understand what they’re doing and what we need to do in response.
Of significance in 2013 was a very big shift away from mining and gas sector investment. Mining and gas sector investment has traditionally accounted for about 91 percent of Chinese investment in Australia. In 2013, this fell down to 44 percent.
What are the longer term trends?
There will be renewed and continuing interest from Chinese companies into out mining sector with particular focus on non-ferrous metals. I think from a power, civil and mining infrastructure perspective, we’ll continue to see a lot of investment from Chinese state-owned enterprises.
And finally, I think the Chinese private sector will continue to invest heavily into our commercial real estate and possibly our agribusiness sector.
What’s the outlook for Chinese investment in Australia?
We remain very positive about Chinese investment into Australia. It’s only early days, and the Chinese government and new leadership has pledged to invest at least another US$500 billion into outbound direct investment globally.
So provided Australia continues to attract it’s 12 percent or more, we stand to do very well from continuing Chinese investment. But this year is a wake-up call, and we do have some work to do to ensure that the Chinese do in fact continue to invest in Australia.