Chinese Investment in Australia Surges 11.7% as Deals Hit Record

  • Inflow of Chinese capital is highest since 2008, KPMG says
  • Investment in agribusiness, infrastructure reaches record

A man runs past the the Sydney Harbour Bridge.

Photographer: Brendon Thorne/Bloomberg

Chinese investment in Australia surged 11.7 percent last year to A$15.4 billion ($11.5 billion) amid booming demand for agricultural assets and infrastructure, according to a report released Monday.

A record 103 deals were signed with Chinese companies in 2016, with 76 percent of those reached with private firms,  KPMG and the University of Sydney said in the report “Demystifying Chinese Investment in Australia.”

Australia, with a population of 24 million people and a land mass larger than India, relies on foreign investment to spur growth. While Prime Minister Malcolm Turnbull’s government blocked two key purchases by Chinese companies last year, citing national security, the report shows that the vast majority of deals are approved.

“There are signs of a growing maturity by Chinese investors in the Australian market,” the report said in its key findings. “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.”

Commercial real estate remained the largest sector, attracting 36 percent of Chinese investment, followed by infrastructure with a record 28 percent including the purchases of Asciano Ltd. and the Port of Melbourne, according to the report. Agribusiness rose threefold from 2015 to more than A$1.2 billion.

While Australia remained second only to the U.S. as the biggest recipient of Chinese capital since 2007, the growth in investment was last year dwarfed by the increase of flows into the European Union and Brazil.

Turnbull’s government faces growing calls from fringe populist parties to restrict foreign deals and opinion polls show there is public unease about Chinese investment, particularly from state-run companies, in farmland and other key assets. In 2015, the government tightened scrutiny for selling farmland to Chinese, Japanese and Korean buyers by requiring purchases of land worth A$15 million and over to be screened for approval.

The government vetoed a Chinese-led group’s bid for the iconic S.Kidman & Co. cattle ranches that span 1.3 percent of the country’s land mass. Last year, the government barred State Grid Corp. of China and Hong Kong billionaire Li Ka-shing’s Cheung Kong Infrastructure Holdings Ltd. from buying a majority stake in power network Ausgrid on security concerns.

Since 2007, Australia has attracted a total of $90 billion in new Chinese investment -- second only to the U.S. with more than $100 billion, the report found.

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