Turning point for Chinese investment into Australia - New research a wakeup call for Australia
17 Mar 2014
The latest report into Chinese direct investment by KPMG, The University of Sydney's China Studies Centre and Professor Hans Hendrischke of the University of Sydney Business School titled, Demystifying Chinese Investment in Australia, March 2014 Update, finds Chinese investment in Australia declined by 10% during 2013, against a backdrop of an overall global increase in Chinese outbound investment during the year.
Based on the KPMG/University of Sydney database, total Chinese ODI in Australia in 2013 was USD 9,115 million, reduced from USD 10,105 million in 2012, reflecting a downward investment trend in the mining and energy sector.
"The Chinese investment profile is changing. For the first time in 2013, Chinese investment in Australia was not concentrated in the mining and gas sectors. We experienced a shift towards a larger number of smaller to medium sized deals and a larger share of private Chinese investors. But these deals do not make up the gap in mining and gas investment," said Professor Hendrischke.
Australia narrowly lost its mantle in 2013 as the world's top destination for Chinese outbound direct investment (ODI)1. In an increasingly competitive international market for attracting Chinese capital, Australia's ranking for accumulated global ODI dropped to second position behind the USA, as did our competitive ranking for the 2013 calendar year, again in favour of the USA. Australia now ranks behind the USA but ahead of Canada, Brazil and Britain2.
In 2012, Australia and the USA were on par - each with 12% of China's annual global ODI volume. In 2013, the USA attracted 17% while Australia attracted 8% of China's annual total ODI.
"Australia has more work to do to continue to attract this investment from an increasingly competitive global market. The 10% investment value fall from 2012 should serve as a warning that Chinese investment remains volatile," said Doug Ferguson, Head of KPMG Australia's Asia Business Group.
1 Based on Heritage Foundation figures for accumulated Chinese investment, 2005-2013; and also year-on-year figures for Chinese investment in Australia 2012 versus 2013 from KPMG/University of Sydney database analysis.
Chinese Investment Tracker 2014, Dataset 1, accessed 26 Feb 2014, 6.40pm