Chinese investment in Australia surges 11.7pc as deals hit record US$11.5b

Record 103 deals signed with Chinese companies in 2016, with 76pc of those reached with private firms

PUBLISHED : Monday, 01 May, 2017, 1:52pm
UPDATED : Monday, 01 May, 2017, 11:09pm

Chinese investment in Australia surged 11.7 per cent last year to A$15.4 billion (US$11.5 billion) amid booming demand for agricultural assets and infrastructure, according to a latest report.

A record 103 deals were signed with Chinese companies in 2016, with 76 per cent of those reached with private firms, KPMG and the University of Sydney said in the report “Demystifying Chinese Investment in Australia.”

Australia, with a population of 24 million people and a land mass larger than India, relies on foreign investment to spur growth.

While Prime Minister Malcolm Turnbull’s government blocked two key purchases by Chinese companies last year, citing national security, the report shows the vast majority of deals were approved.

There are signs of a growing maturity by Chinese investors in the Australian market.
KPMG’s “Demystifying Chinese Investment in Australia” report

“There are signs of a growing maturity by Chinese investors in the Australian market,” the report said in its key findings. “The number of joint ventures is increasing with more repeat investments by established Chinese companies. This has set a foundation for growth in future investment.”

Commercial real estate remained the largest sector, attracting 36 per cent of Chinese investment, followed by infrastructure with a record 28 per cent including the purchases of Asciano and the Port of Melbourne, according to the report. Agribusiness rose threefold from 2015 to more than A$1.2 billion.

While Australia remained second only to the US as the biggest recipient of Chinese capital since 2007, the growth in investment was last year dwarfed by the increase of flows into the European Union and Brazil.

Turnbull’s government faces growing calls from fringe populist parties to restrict foreign deals and opinion polls show there is public unease about Chinese investment, particularly from state-run companies, in farmland and other key assets.

In 2015, the government tightened scrutiny for selling farmland to Chinese, Japanese and Korean buyers by requiring purchases of land worth A$15 million and over to be screened for approval.

The government vetoed a Chinese-led group’s bid for the iconic S.Kidman & Co, the cattle ranchers that span 1.3 per cent of the country’s land mass.

Last year, the government barred the State Grid Corp of China and Hong Kong billionaire Li Ka-shing’s Cheung Kong Infrastructure Holdings from buying a majority stake in power network Ausgrid on security concerns.

Since 2007, Australia has attracted a total of $90 billion in new Chinese investment – second only to the U.S. with more than $100 billion, the report found.