Demystifying Chinese Investment in Australia: May 2017

Demystifying Chinese Investment in Australia: May 2017

2016 was a year of new records for Chinese investment in Australia. Australia remains the second largest recipient country for accumulated Chinese Investment however, it is falling behind in growth.

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Australia retains its position as the second largest recipient of Chinese ODI with data showing close to USD 90 billion of accumulated new investment since 2007. The United States ranks first with accumulated new investment surpassing USD 100 billion1.

This May 2017 report is the latest in a series of Demystifying Chinese Investment in Australia reports, by KPMG and The University of Sydney's China Studies Centre. It analyses Chinese outbound direct investment into Australia in 2016 and includes specialist contributions from Knight Frank, providing data and analysis on real estate transactions and Powell Tate Australia, provided analysis on gaining a social licence to operate.

2016 – a year of new records

  • 2016 saw a record of 103 deals signed.
  • Chinese private company investors accounted for a record 76 percent of all projects by number and nearly half of the total project value.
  • Infrastructure investment accounted for a record 28 percent driven by multi-billion dollar investments in Asciano Ltd and the Port of Melbourne.
  • Agribusiness grew from AUD 375 million in 2015 to over AUD 1.2 billion in 2016, the largest year on record.
  • It was a record year for investment in Tasmania with agribusiness accounting for 100 percent of investment at AUD 280 million.

Key findings

  • Globally Australia remains the second largest recipient of Chinese ODI with data showing over USD 90 million of accumulated new investment since 2007.
  • 2016 saw the highest Chinese investment inflow to Australia since 2008 peak (AUD 15.36 billion/USD 11.49 billion in 2016).
  • Chinese investment in Australia increased 11.7 percent from 2015 to AUD 15.36 billion.
  • New South Wales continued to be the priority state for Chinese investments at 53 percent, on the back of commercial real estate, followed by Victoria at 25 percent.
  • Commercial real estate remains the largest sector of investment at 36 percent.
  • This year saw a significant change in real estate investment with residential development sites now accounting for 51 percent of value, a significant increase compared to just 27 percent in 2015.
  • For the first time, energy overtook mining as a preferred ENR sector attracting AUD 1.149 billion.

There are signs of a growing maturity by Chinese investors in the Australian market. 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.

There are already well over 500 large Chinese companies invested in Australia which continue to show interest in high quality, large scale investments and projects.

Australia has a strategic opportunity to grow and diversify its already strong economic partnership with China through structural reform.

Visual report summary

Snapshot of the Demystifying Chinese Investment in Australia: May 2017 report.

Footnote

1 Thilo Hanemann and Cassie Gao, Record Deal Making in 2016 Pushes Cumulative Chinese FDI in the US above $100 billion, Rhodium Group, December 30 2016; (source includes investments valued under USD 5 million).

Demystifying Chinese investment in Australia

Research on Chinese investment in Australia written collaboratively with the University of Sydney China Studies Centre.

 
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© 2017 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

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