Chinese investment in down 36% - it’s time for a more balanced debate about the national interest

Chinese investment in down 36% - it’s time for a more balanced debate about the national interest
Staff reporterApril 9, 2019

GUEST OBSERVATION

Chinese investment in Australia fell 36% in 2018, to A$8.2 billion (US$6.2 billion) from A$13 billion (US$10 billion) in 2017, according to research by KPMG and the University of Sydney Business School.

This is despite Chinese investors still generally regarding Australia as safer and more attractive than most other countries. So 2018 need not be a turning point. But it is cause for reflection.

Discussion about Chinese investment in recent years has been dominated by political and security concerns. These concerns need to be balanced by the national interest in economic prosperity. Chinese investment creates jobs, increases export opportunities and deepens relations with our most significant trade partner.

Arguably the pendulum has to swing back to thinking about the economic benefits. We need a more balanced national conversation.

Many losers, one winner

Our data covers direct investments through mergers and acquisitions, joint ventures and new projects. We do not include portfolio investments, such as buying stocks and bonds, which do not result in foreign management, ownership or legal control. Nor do we include residential property sales.

In the mining, agribusiness and services sectors investment fell by more than 90%. In renewable energy it fell by 48%, and in commercial real estate by 31%.

The only sector where investment did not fall was health care, where investment more than doubled to A$3.4 billion. This made health care the biggest investment sector, attracting 41.7% of all Chinese money, relegating commercial real estate (36.7%) to second place.

The declines were driven by state-owned enterprises pulling back on foreign investment. In 2018 13% of Chinese money came from state-owned enterprises, with 87% from private companies.

This reflects the Chinese government’s greater control of capital outflows and pressure to reduce debt levels, as well as the Australian government’s security concerns about Chinese influence.

It also reflects global dynamics. Chinese investment in Australia is no longer isolated from scrutiny of Chinese investment in North America and Europe. Excluding Chinese technology from telecommunications infrastructure is a notable example.

In the United States, Chinese investment fell 83% to US$4.8 billion from US$29 billion in 2017. In Canada, it fell 47% to US$3.4 billion from US$6.2 billion in 2017.

Balancing competing concerns

Australian governments, corporations and professional advisers need to consider what types of Chinese investments and investors are desired and actively welcome in Australia.

Our report points to areas where Chinese investment is in Australia’s national interest and benefits the global integration and competitiveness of Australian industries.

Health care is a key example.

Chinese investment in health care companies has both provided capital for innovation and facilitated entry into the Chinese market.

Take the Chinese private equity firm CDH buying Sirtex Medical Ltd for A$1.9 billion. Sirtex is an Australian medical device company with a treatment for liver cancer. Its acquisition enables expansion into China, which accounts for more half of the global incidence of liver cancer.

In mining, lithium provides an example of Chinese investment adding value. Tianqi Lithium has invested A$700 million in a processing plant in Perth. The plant will provide about 200 jobs and produce 48,000 tonnes of battery-grade lithium hydroxide for export.

Even in food and agriculture, which has generated much controversy over land acquisitions, we see room for advantageous investment processing and value-adding facilities, such as regional abattoirs.

Signalling Australia’s economic interests in Chinese and foreign investment is crucial to Australia’s prosperity.

At a time of global uncertainty, Australian politicians, bureaucrats, business leaders, educational organisations and others must work quietly and respectfully with their Chinese counterparts to allay community concerns and consolidate Australia’s reputation as a welcoming and proactive partner.

Hans Hendrischke, Professor of Chinese Business and Management, University of Sydney

The authors contributed to the Demystifying Chinese Investment in Australia Report.The Conversation

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Editor's Picks

Spyre Group brings successful Queensland blueprint to Melbourne with Hampton Ltd
Saxon Street by Milieu to bring new housing and urban design to Brunswick’s cultural core
Construction begins at Fishermans Bend Innovation Precinct
Gurner reveals new plans for final Jam Factory stage
Tian An launches North Village, Auburn Square second stage

Related Projects

16-22 Maud Street, Newstead QLD 4006
16-22 Maud Street, Newstead QLD 4006
16-22 Maud Street, Newstead QLD 4006
Price
Contact agent
35-37 Mount Street, Prahran VIC 3181
35-37 Mount Street, Prahran VIC 3181
35-37 Mount Street, Prahran VIC 3181
Price
Contact agent
118-124 Benelong Road, Cremorne NSW 2090
118-124 Benelong Road, Cremorne NSW 2090
118-124 Benelong Road, Cremorne NSW 2090
Price
Contact agent
118-120 Matthew Flinders Drive, Cooee Bay QLD 4703
118-120 Matthew Flinders Drive, Cooee Bay QLD 4703
118-120 Matthew Flinders Drive, Cooee Bay QLD 4703
Price
Contact agent
26-62 Kinross Road, Thornlands QLD 4164
26-62 Kinross Road, Thornlands QLD 4164
26-62 Kinross Road, Thornlands QLD 4164
Price
Contact agent
9-11 Baroonba Street, Whitebridge NSW 2290
9-11 Baroonba Street, Whitebridge NSW 2290
9-11 Baroonba Street, Whitebridge NSW 2290
Price
Contact agent
18 Ransley Street, Penrith NSW 2750
Perle, East Side Quarter, Penrith - 18 Ransley Street, Penrith
18 Ransley Street, Penrith NSW 2750
Price
Contact agent
Ernest Cavanagh Street, Gungahlin ACT 2912
Raya, Gungahlin - Ernest Cavanagh Street, Gungahlin
Ernest Cavanagh Street, Gungahlin ACT 2912
Price
Contact agent
39 Browning Street, South Brisbane QLD 4101
39-41 Browning Street, South Brisbane - 39 Browning Street, South Brisbane
39 Browning Street, South Brisbane QLD 4101
Price
Contact agent
675 Gardeners Road, Mascot NSW 2020
Kiara North, Mascot - 675 Gardeners Road, Mascot
675 Gardeners Road, Mascot NSW 2020
Price
Contact agent
187 Salvado Road, Jolimont WA 6014
Jolie, Jolimont - 187 Salvado Road, Jolimont
187 Salvado Road, Jolimont WA 6014
Price
Contact agent
47 Maning Avenue, Sandy Bay TAS 7005
Grace Residences - 47 Maning Avenue, Sandy Bay
47 Maning Avenue, Sandy Bay TAS 7005
Price
Contact agent
Cove Lane, Narooma NSW 2546
Cove, Narooma - Cove Lane, Narooma
Cove Lane, Narooma NSW 2546
Price
Contact agent
52-56 Ramsay Street, Five Dock NSW 2046
Ava, Five Dock - 52-56 Ramsay Street, Five Dock
52-56 Ramsay Street, Five Dock NSW 2046
Price
Contact agent
2375 Gold Coast Highway, Mermaid Beach QLD 4218
The Alfred - 2375 Gold Coast Highway, Mermaid Beach
2375 Gold Coast Highway, Mermaid Beach QLD 4218
Price
Contact agent
129-131 Russell Ave, Dolls Point NSW 2219
ALLURE COLLECTION - 129-131 Russell Ave, Dolls Point
129-131 Russell Ave, Dolls Point NSW 2219
Price
Contact agent
62 Constitution Avenue, Parkes ACT 2600
The Eastbourne on Commonwealth Park - 62 Constitution Avenue, Parkes
62 Constitution Avenue, Parkes ACT 2600
Price
Contact agent
155 Old Burleigh Road, Broadbeach QLD 4218
Sandpiper, Broadbeach - 155 Old Burleigh Road, Broadbeach
155 Old Burleigh Road, Broadbeach QLD 4218
Price
Contact agent
33 Vulture Street, West End QLD 4101
33 Vulture Street, West End QLD 4101
33 Vulture Street, West End QLD 4101
Price
Contact agent
19 Governor Terrace, Murarrie QLD 4172
Park Hill Village Collection, Murarrie - 19 Governor Terrace, Murarrie
19 Governor Terrace, Murarrie QLD 4172
Price
Contact agent
122 Marine Parade, Miami QLD 4220
Nalu, Miami - 122 Marine Parade, Miami
122 Marine Parade, Miami QLD 4220
Price
Contact agent
34 Jacaranda Place, Indooroopilly QLD 4068
34 Jacaranda Place, Indooroopilly QLD 4068
34 Jacaranda Place, Indooroopilly QLD 4068
Price
Contact agent
167 Old Burleigh Road, Broadbeach QLD 4218
167 Old Burleigh Road, Broadbeach QLD 4218
167 Old Burleigh Road, Broadbeach QLD 4218
Price
Contact agent
21 Queens Way, Yeerongpilly QLD 4105
Yeerongpilly Green - 21 Queens Way, Yeerongpilly
21 Queens Way, Yeerongpilly QLD 4105
Price
Contact agent
445-449 River St, Ballina NSW 2478
Solhaven - 445-449 River St, Ballina
445-449 River St, Ballina NSW 2478
Price
Contact agent
52 Sunset Boulevard, Surfers Paradise QLD 4217
52 Sunset Boulevard, Surfers Paradise QLD 4217
52 Sunset Boulevard, Surfers Paradise QLD 4217
Price
Contact agent
6 Jack Brabham Drive, Hurstville NSW
Horizon Hurstville - 6 Jack Brabham Drive, Hurstville
6 Jack Brabham Drive, Hurstville NSW
Price
Contact agent
49 Seena Drive, Edgeworth NSW 2285
49 Seena Drive, Edgeworth NSW 2285
49 Seena Drive, Edgeworth NSW 2285
Price
Contact agent
Lot 118 Ocean Steamers Road, Port Adelaide SA 5015
Lot 118 Ocean Steamers Road, Port Adelaide SA 5015
Lot 118 Ocean Steamers Road, Port Adelaide SA 5015
Price
Contact agent
203 Ashmore Road, Benowa QLD 4217
203 Ashmore Road, Benowa QLD 4217
203 Ashmore Road, Benowa QLD 4217
Price
Contact agent
41 Warrs Road & 7 Horizon Drive, Maribyrnong VIC 3032
41 Warrs Road & 7 Horizon Drive, Maribyrnong VIC 3032
41 Warrs Road & 7 Horizon Drive, Maribyrnong VIC 3032
Price
Contact agent
774 Ripley Road, Ripley QLD 4306
774 Ripley Road, Ripley QLD 4306
774 Ripley Road, Ripley QLD 4306
Price
Contact agent
6 Homelea Court, Rivervale WA 6103
6 Homelea Court, Rivervale WA 6103
6 Homelea Court, Rivervale WA 6103
Price
Contact agent
7002 Ripley Road, Ripley QLD 4306
7002 Ripley Road, Ripley QLD 4306
7002 Ripley Road, Ripley QLD 4306
Price
Contact agent
136-148 Fox Valley Road, Wahroonga NSW 2076
136-148 Fox Valley Road, Wahroonga NSW 2076
136-148 Fox Valley Road, Wahroonga NSW 2076
Price
Contact agent
3 Delos Way, Sorrento WA 6020
3 Delos Way, Sorrento WA 6020
3 Delos Way, Sorrento WA 6020
Price
Contact agent
77 Sutton Street, Redcliffe QLD 4020
77 Sutton Street, Redcliffe QLD 4020
77 Sutton Street, Redcliffe QLD 4020
Price
Contact agent
119 Queen Street & 86 King Street, Bendigo VIC 3550
119 Queen Street & 86 King Street, Bendigo VIC 3550
119 Queen Street & 86 King Street, Bendigo VIC 3550
Price
Contact agent
181 Prospect Road, Prospect SA 5082
181 Prospect Road, Prospect SA 5082
181 Prospect Road, Prospect SA 5082
Price
Contact agent
593-595 Albany Highway, Victoria Park WA 6100
593-595 Albany Highway, Victoria Park WA 6100
593-595 Albany Highway, Victoria Park WA 6100
Price
Contact agent
1-28, 40 Civic Way, Rouse Hill NSW 2155
1-28, 40 Civic Way, Rouse Hill NSW 2155
1-28, 40 Civic Way, Rouse Hill NSW 2155
Price
Contact agent
93-97 Bay Street, Brighton VIC 3186
93-97 Bay Street, Brighton VIC 3186
93-97 Bay Street, Brighton VIC 3186
Price
Contact agent
22-38 & 27-31 The Avenue, Coburg VIC 3058
22-38 & 27-31 The Avenue, Coburg VIC 3058
22-38 & 27-31 The Avenue, Coburg VIC 3058
Price
Contact agent
1F Ashline Street, Wollert VIC 3750
1F Ashline Street, Wollert VIC 3750
1F Ashline Street, Wollert VIC 3750
Price
Contact agent
Lots 100 & 900 Kentucky Court, Cockburn Central WA 6164
Lots 100 & 900 Kentucky Court, Cockburn Central WA 6164
Lots 100 & 900 Kentucky Court, Cockburn Central WA 6164
Price
Contact agent
1260-1272 Malvern Road, Malvern VIC 3144
1260-1272 Malvern Road, Malvern VIC 3144
1260-1272 Malvern Road, Malvern VIC 3144
Price
Contact agent
472 Regency Road, Prospect SA 5082
472 Regency Road, Prospect SA 5082
472 Regency Road, Prospect SA 5082
Price
Contact agent
273A Gorge Road, Paradise SA 5075
273 Gorge Road, Paradise SA 5075 - 273A Gorge Road, Paradise
273A Gorge Road, Paradise SA 5075
Price
Contact agent
270 The Esplanade, Miami QLD 4220
270 The Esplanade, Miami QLD 4220
270 The Esplanade, Miami QLD 4220
Price
Contact agent
2 & 6 Austral Parade, East Bunbury WA 6230
2 & 6 Austral Parade, East Bunbury WA 6230
2 & 6 Austral Parade, East Bunbury WA 6230
Price
Contact agent