About the Report
KPMG and The University of Sydney formed a strategic relationship to research and publish insights on Chinese investors. Our first report was launched in September 2011 and this is the seventeenth Demystifying Chinese Investment report in our series. This report examines Chinese investment in Australia for the calendar year 2020. It incorporates insights from interviews and a survey with Chinese investors in Australia across a range of sectors into their perceptions of the Australian investment climate as well as the key challenges they face in Australia.
The catalyst for our report series was the lack of detailed factual information about the nature and distribution of China’s outbound direct investment (ODI) in Australia. Without this information, there is misinformation and speculation. Our reports seek to set the record straight and debunk the myths associated with Chinese investment in this country.
Key findings
- Since 2007, Chinese companies have invested approximately USD110 billion into Australia but the 2020 year is the lowest result in this cycle.
- Chinese investment in Australia fell in value and number for the calendar year 2020 from the previous year. Investment value was down 26.8 percent to AU$2.5 billion from AU$3.4 billion in 2019, the lowest level since 2007. The number of deals was also down – by over 50 percent, from 42 in 2019 to 20 in 2020.
- The fall in investment came against the backdrop of the COVID-19 pandemic resulting in a 35 percent reduction in Foreign Direct Investment (FDI) inflows globally, deteriorating bilateral diplomatic relations between Australia and China, and increased government intervention in foreign investment in both Australia and China. Despite this decline, Chinese investment in Australia remains on par with Chinese investment in other developed economies such as Canada and Germany. Chinese ODI to UK and EU fell 45% in the same year.
- The biggest transaction of 2020 by Chinese investors in Australia was the purchase of a commercial real estate asset in Sydney – 45 Clarence Street by Peakstone for AU$530 million, followed by Shangdong Gold’s acquisition of Cardinal Resources for AU$395 million.
- Mining was the largest sector recipient with 37.6 percent of total Chinese investment, followed closely by commercial real estate, which accounted for 36.1 percent of investment. The services sector accounted for 21 percent of investment, with food & agribusiness (4 percent) and healthcare (1.3 percent) also represented. There was no investment recorded in renewable energy, energy (oil and gas), or infrastructure.
- New South Wales continued to attract the lion’s share of Chinese investment, with just under half (49 percent) at AU$1.246 billion of total investment. Reflecting continuing investment in the mining sector, Western Australia received the second highest proportion of Chinese investment, at 26 percent, followed by Victoria with 24 percent. The only other state to receive investment was Queensland, with 1 percent.
- Privately-owned enterprises accounted for 62 percent of investment value and 85 percent of deal numbers, out-weighing state-owned investment.
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Download: Demystifying Chinese Investment in Australia – July 2021