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Australian Investments in China Dwindle by 36%

Chinese investors are now showing a preference for Australia’s healthcare industry over mining.

Chinese overseas direct investment (ODI) in Australia has decreased to the second-lowest level since 2006, with healthcare surpassing mining as the primary industry of interest.

Chinese ODI fell by 36 percent to $1.34 billion (US$886 million) in 2023 from $2.1 billion the previous year, as reported in the Demystifying Chinese Investment in Australia (April 2024) report (pdf), published jointly 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,” explained KPMG Australia’s Chinese Business Practice Partner and co-author of the report, Helen Zhi Dent.

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

The report focuses on investments in Australia by corporate entities, not individuals, with headquarters based in China, excluding Hong Kong and Macau, through mergers and acquisitions.

The report highlighted three key investments during the year: 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.

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Data revealed that healthcare accounted for 42 percent of Chinese investment inflows through two transactions totaling $562 million.

Food and agriculture investments represented 2 percent, with a cotton farming deal and a pet food deal amounting to $283 million.

Oil and gas investments shared 18 percent, or $247 million, while renewable energy investments made up 15 percent, or $197 million.

“The rise of Chinese-funded mining and processing ventures in alternative markets, like Southeast Asia, amplifies these trends by creating competitive pressures and diverting attention from Australian opportunities,” noted University of Sydney Business School Professor and report co-author Hans Hendrischke.

Australia Presses for Removal of More Trade Impediments

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

After successfully negotiating the removal of import duties on Australian wine by Beijing, Mr. Farrell mentioned that the Albanese government is striving to eliminate remaining trade barriers on live rock lobster and certain red meat export establishments.

“China remains our largest trading partner and will continue to be so for the foreseeable future,” emphasized the trade minister, noting that trade impediments have already decreased to less than $1 billion from $20 billion in 2019.

Mr. Farrell also stressed the importance of expanding into new markets through trade agreements with countries like India and the UK.

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