Chinese Investment in Australia Plunges 36 Percent

Chinese investors are now favouring Australia’s healthcare industry over mining.Chinese overseas direct investment (ODI) in Australia plunged to the second-lowest level since 2006, with healthcare overtaking mining as the key industry.Chinese ODI fell 36 percent to $1.34 billion (US$886 million) in 2023 from $2.1 billion in the prior year, according to the Demystifying Chinese Investment in Australia (April 2024) report (pdf), jointly published by the University of Sydney Business School and KPMG.“This reflects the shift in priorities for Chinese ODI, which is increasingly flowing towards Belt and Road Initiative countries as well as towards mining and processing ventures in alternative markets, such as Southeast Asia,” KPMG Australia’s Chinese Business Practice Partner and report co-author Helen Zhi Dent said.“However, the improving cross-border trade environment as demonstrated by the recent removal of wine tariffs could help to kickstart increased Chinese investor interest in Australian businesses.”The report covers investments in Australia by corporate, not individuals, with head offices based in China, excluding Hong Kong and Macau, through mergers and acquisitions.The report emphasised three investments during the year, namely Hillhouse Investment Management’s acquisition of healthcare company George Clinical for $500 million; Hainan Mining’s acquisition of energy firm Roc Oil Company for $245 million; and Beijing Energy International Holding’s acquisition of renewable energy provider Moorabool Wind Farm (Holding) and Moorabool Wind South Farm (Holding) for $197 million.Related StoriesThe data showed that healthcare accounted for 42 percent of Chinese investment inflows through two transactions amounting to $562 million.Food and agriculture investment represented 2 percent, with a cotton farming deal and a pet food deal totalling $283 million.Oil and gas investment shared 18 percent or $247 million, while renewable energy investment accounted for 15 percent or $197 million.“The emergence of Chinese-funded mining and processing ventures in alternative markets, such as Southeast Asia, intensifies these dynamics by creating competitive pressures and diverting attention from Australian opportunities,” University of Sydney Business School Professor and report co-author Hans Hendrischke said.“While Chinese investor confidence towards mergers and acquisitions in the Australian market remains low, we are seeing increasing interest in greenfield investments, particularly in the electrical vehicle, solar panels and batteries, and industrial machinery sectors.“This is driven by the perception that these investments offer lower upfront financial risks and the potential for higher long-term rewards.”Australia Presses for Removal of More Trade ImpedimentsIn a speech at the Sydney Institute, Trade and Tourism Minister Don Farrell said that Australia’s bilateral relationship with the Chinese Communist Party (CCP) was in a difficult place.After successfully negotiating for Beijing’s removal of import duties on Australian wine, Mr. Farrell said that the Albanese government continues to press for the removal of the remaining trade impediments on live rock lobster and some red meat export establishments.“The fact is, China is our largest trading partner and will remain so for the foreseeable future,” the trade minister said, noting that from trade impediments have already been reduced to less than $1 billion from $20 billion in 2019.Mr. Farrell also emphasised the importance of expanding into new markets including through trade agreements that Australia has forged with India and the UK.

Chinese Investment in Australia Plunges 36 Percent

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Chinese investors are now favouring Australia’s healthcare industry over mining.

Chinese overseas direct investment (ODI) in Australia plunged to the second-lowest level since 2006, with healthcare overtaking mining as the key industry.

Chinese ODI fell 36 percent to $1.34 billion (US$886 million) in 2023 from $2.1 billion in the prior year, according to the Demystifying Chinese Investment in Australia (April 2024) report (pdf), jointly published by the University of Sydney Business School and KPMG.

“This reflects the shift in priorities for Chinese ODI, which is increasingly flowing towards Belt and Road Initiative countries as well as towards mining and processing ventures in alternative markets, such as Southeast Asia,” KPMG Australia’s Chinese Business Practice Partner and report co-author Helen Zhi Dent said.

“However, the improving cross-border trade environment as demonstrated by the recent removal of wine tariffs could help to kickstart increased Chinese investor interest in Australian businesses.”

The report covers investments in Australia by corporate, not individuals, with head offices based in China, excluding Hong Kong and Macau, through mergers and acquisitions.

The report emphasised three investments during the year, namely Hillhouse Investment Management’s acquisition of healthcare company George Clinical for $500 million; Hainan Mining’s acquisition of energy firm Roc Oil Company for $245 million; and Beijing Energy International Holding’s acquisition of renewable energy provider Moorabool Wind Farm (Holding) and Moorabool Wind South Farm (Holding) for $197 million.

The data showed that healthcare accounted for 42 percent of Chinese investment inflows through two transactions amounting to $562 million.

Food and agriculture investment represented 2 percent, with a cotton farming deal and a pet food deal totalling $283 million.

Oil and gas investment shared 18 percent or $247 million, while renewable energy investment accounted for 15 percent or $197 million.

“The emergence of Chinese-funded mining and processing ventures in alternative markets, such as Southeast Asia, intensifies these dynamics by creating competitive pressures and diverting attention from Australian opportunities,” University of Sydney Business School Professor and report co-author Hans Hendrischke said.

“While Chinese investor confidence towards mergers and acquisitions in the Australian market remains low, we are seeing increasing interest in greenfield investments, particularly in the electrical vehicle, solar panels and batteries, and industrial machinery sectors.

“This is driven by the perception that these investments offer lower upfront financial risks and the potential for higher long-term rewards.”

.

Australia Presses for Removal of More Trade Impediments

In a speech at the Sydney Institute, Trade and Tourism Minister Don Farrell said that Australia’s bilateral relationship with the Chinese Communist Party (CCP) was in a difficult place.

After successfully negotiating for Beijing’s removal of import duties on Australian wine, Mr. Farrell said that the Albanese government continues to press for the removal of the remaining trade impediments on live rock lobster and some red meat export establishments.

“The fact is, China is our largest trading partner and will remain so for the foreseeable future,” the trade minister said, noting that from trade impediments have already been reduced to less than $1 billion from $20 billion in 2019.

Mr. Farrell also emphasised the importance of expanding into new markets including through trade agreements that Australia has forged with India and the UK.

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